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BOOK 


OF 


COMMKRCIAL 


AS    KXISTINQ 


AND 

K.  F*. 


DESIGNED  FOR  USE  IN  COMMERCIAL  SCHOOLS 
AND  BY  BUSINESS  MEN. 


NINTH   EDITION 


REVISED 


PUBLISHED  BY 
HEALD'S    BUSINESS    COLLEGE^ 

SAN  FRANCISCO.  CAL. 
1910 


CopyriKlited,  1884,  by 
'S    BUSINESS 


EDUCATION 


- 

1  •   -. 

1  / 
.-     -•;>• • • 


PREFACE. 


THE  object  which  has  been  steadily  kept  in  view  in  the  preparation 
of  the  following  pages,  is  the  presentation,  in  a  compact  and  yet 
clear  form,  of  those  general  principles  of  law  as  existing  in  Cali- 
fornia, a  knowledge  of  which  is  most  necessary  to  the  business  man.  The 
point  of  view  is  that  of  the  merchant,  and  not  of  the  lawyer,  and  there* 
fore  scientific  arrangement  has  been  sacrificed  to  simplicity.  In  the  gen- 
eral arrangement,  and  in  the  presentation  of  each  topic,  the  aim  has  been 
a  statement  of  general  principles,  in  logical  sequence,  and  in  such  form 
that  they  will  be  easiest  of  application.  Lack  of  space  has  prevented 
any  attempt  at  applying  these  principles;  that  must  be  the  work  of  those 
who  use  the  book. 

In  law,  more  than  in  any  other  science,  originality  is  not  to  be  attained* 
Every  principle  in  this  book  has  been  stated  before,  and  perhaps  stated 
better  than  it  is  here.  The  standard  text-writers  have  been  liberally  con- 
sulted. Kent's  Commentaries,  Smith's  Mercantile  Law,  Parson  on  Con- 
tracts, and  the  California  Codes,  have  been  most  freely  referred  to.  The 
arrangement,  the  presentation  of  each  subject,  and  the  statement  of 
principles  are,  however,  new,  and  whatever  of  merit  there  may  be  hi  these 
is  all  that  can  be  claimed  for  this  book. 


5411*78 


CONTENTS. 


INTRODUCTION  —  THE    GENERAL     PRINCIPLES    OF     LAW   AND 

OF  PROPERTY 7 

PART  I. 

GENERAL  FEATURES  OF  CONTRACTS. 

CHAPTER  L— FORMATION  AND  CLASSES 13 

CHAPTER  II.— CONSTRUCTION 23 

CHAPTER  III.— EXTINCTION 26 

PART  II. 

PARTIES   TO    CONTRACTS. 

CHAPTER  I. — PARTIES  GENERALLY 36 

CHAPTER  II.— TRUSTEES <ta 

CHAPTER  III.— AGENTS 5- 

CHAPTER  IV.— PARTNERS 59 

CHAPTER  V.— CORPORATIONS 68 

PART  III. 

CERTAIN   SPECIAL    CLASSES    OF   CONTRACTS. 

CHAPTER  I. — SALES  OF  PERSONAL  PROPERTY 74 

CHAPTER  II.— NEGOTIABLE  INSTRUMENTS 81 

CHAPTER  III.— BAILMENTS 94 

PART  IV. 

CHAPTER  L— REAL  PROPERTY  CONTRACTS 104 

CHAPTER  II.— LIENS 113 

CHAPTER  III.— WILLS..                           "9 


INTRODUCTION. 


•A  Law  Is  A  RULE  OF  CONDUCT  PRESCRIBED  BY  A 
SUPREME  POWER. 

Municipal  Law  Is  *THE  ENTIRE  BODY  OF  RULES  BY 
WHICH  THE  INTERCOURSE  OF  THE  INDIVIDUALS  IN  A  STATE 
Is  REGULATED. 

These  rules,  which  are  enforced  by  the  governing  body, 
arise  from  the  necessity  of  some  restriction  being  placed  upon 
the  actions  of  individuals  in  those  cases  where  their  actions 
might  be  detrimental  to  the  interests  of  the  community.  The 
various  questions  which  arise  from  our  complicated  social 
system  also  demand  a  fixed  and  certain  means  of  adjudication. 
'Every  person  is  conclusively  presumed  to  know  the  law,  on  any 
subject,  and  to  be  governed  by  that  knowledge  in  his  transac- 
tions. 

A  State  Is  A  SOCIETY  OF  MEN  UNITED  TOGETHER  IN 
ONE  COMMUNITY  FOR  THE  DEFENCE  OF  THEIR  RIGHTS. 

The  term  "State"  is  also  applied,  in  this  country,  to  the 
several  members  of  the  United  States,  but,  owing  to  the  pecul- 
iar nature  of  our  Government,  'the  laws  of  both  the  Federal  and 
State  Governments  are  taken  together  to  form  the  municipal  law 
of  any  State. 

The  municipal  law  of  the  State  is  supreme  within  that 
State;  but  only  in  exceptional  cases  has  it  any  authority  beyond 
its  borders.  Each  of  the  United  States  is,  within  the  sphere 
of  its  reserved  rights,  foreign  territory  as  to  all  the  other  States. 

Forms  of  Law. — LAW,  WITH  REGARD  TO  ITS  FORM  OF 
EXPRESSION,  Is  EITHER  "WRITTEN,  OR  UNWRITTEN  OR  COM- 
MON LAW. 

(7) 


INTRO  D  UCTION. 


The  COMMON  LAW  is  7the  body  of  rules,  based  upon 
those  customs  which  were  observed  in  England  at  the  earliest 
times,  and  expanded  through  succeeding  generations  to  meet 
the  requirements  of  advancing  civilization.  This  law  is  set 
forth  in  the  decisions  of  the  courts  of  last  resort  in  that  country 
and  in  the  United  States,  and  forms  the  foundation  of  the  legal 
system  of  this  country.  The  Common  law  has  been  developed 
both  in  the  Law  Courts  and  the  Court  of  Chancery  or  Equity 
Court. 

The  WRITTEN  LAW  is  'that  contained  in  the  Statutes  and 
Constitution  of  this  country. 

A  STATUTE  Is  *A  LAW  ENACTED  BY  FORMAL  ACT  OF 
THE  LEGISLATIVE  POWER. 

A  Constitution,  as  understood  in  this  country,  is  1§a  higher 
and  more  authoritative  form  of  Statute.  The  Constitution  is 
enacted  by  the  people  directly,  setting  forth  and  regulating  the 
manner  in  which  their  representatives  shall  govern  for  them. 

In  thir  country  the  people  of  each  State  are  governed  by 
tv/o  Constitutions,  the  Federal  and  the  State.  The  STATE  CON- 
STITUTIONS provide  for  the  machinery  of  the  State  Governments 
and  confine  the  officers  within  certain  limitations  in  their 
actions.  The  FEDERAL  CONSTITUTION,  on  the  other  hand,  is 
a  grant  of  powers.  The  Federal  Government  is  supreme  in 
the  exercise  of  the  delegated  powers;  the  State  Governments 
are  supreme  in  the  exercise  of  the  reserved  powers. 

The  ordinary  STATUTE  or  legislative  enactment,  is  of 
inferior  authority  to  the  Constitutions,  and  if  it  conflict  with 
them  it  is  inoperative.  The  Statutes  of  California  are,  for  the 
most  part,  contained  12in  the  Codes. 

13A  CODE  Is  A  GENERAL  SYSTEM  OF  LAW  EMBODIED  IN 
ONE  STATUTE. 

The  Codes  of  California  are  "four  in  number:  l5The 
Civil  Code,  the  Code  of  Civil  Procedure,  the  Penal  Code,  and 
the  Political  Code. 

The  CIVIL  CODE  contains  16the  general  rules  regulating 


INTRODUCTION. 


the  social  intercourse  of  the  citizens;  the  CODE  OF  CIVIL  PRO- 
CEDURE contains  the  rules  of  practice;  the  PENAL  CODE 
defines  crimes  and  prov;  'es  for  their  punishment;  and  the 
POLITICAL  CODE  sets  forth  the  political  divisions  of  the  State 
the  rules  governing  elections,  etc. 

Property. — PROPERTY  Is  "ANYTHING  OF  WHICH  ONE 
OR  MORE  PERSONS  MAY  HAVE  THE  RIGHT  OF  EXCLUSIVE 
CONTROL. 

Thus  land,  and  all  things  attached  to  it,  as  houses,  trees, 
crops;  all  things  which  are  capable  of  appropriation  or  manual 
delivery,  as  horses,  grain,  etc.;  and  all  obligations,  as  notes, 
bills,  debts,  are  included  as  property. 

OWNERSHIP  Is  ISTHE  RIGHT  OF  EXCLUSIVE  CONTROL  OF 
PROPERTY. 

The  most  convenient  division  of  property  is  into  19things 
movable,  or  PERSONAL  PROPERTY,  and  things  immovable,  or 
REAL  PROPERTY. 

REAL  PROPERTY  includes  Mland,  and  all  things  affixed  to 
it,  as  trees,  walls,  and  houses;  or  appurtenant  to  it,  as  a  right 
of  way  or  watercourse. 

PERSONAL  PROPERTY  includes  81all  things  not  included 
under  the  head  of  real  property. 

The  division  into  Real  and  Personal  property  requires  to 
be  observed,  because,  in  many  cases,  property  is  at  one  time 
reaj.  and  at  another,  personal,  and  is  governed  by  different  rules 
in  each  case. 

It  is  with  Personal  property  almost  exclusively  that  Com 
mercial  Law  has  to  do. 

WHO  MAY  OWN  PROPERTY?  "Any  person,  whether 
male  or  female,  married  or  single,  adult  or  minor,  citizen  or 
alien  may  own  property  in  this  State.  Every  owner  holds  his 
property,  however,  subject  to  the  duty  ^to  use  it  in  such  man- 
ner as  not  to  interfere  with  the  rights  of  the  community. 

The  ownership  of  property  may  be  24by  one  person,  or  by 
several  persons.  An  ownership  by  several  persons  is  either  of 


10  INTRODUCTION. 


"Joint  interests,  of  interests  in  Common,  Partnership  interests, 
or  Community  interests. 

A  JOINT  INTEREST  exists  "when  several  persons  own  indivi- 
ded  shares  in  certain  property,  which  interests  were  all  created  at 
the  same  time  and  by  the  same  act.  The  distingushing  feat- 
ure of  joint  tenancy  is  "the  right  of  survivorship,  i.  e.,  the  right,, 
when  one  of  several  joint  tenants  dies,  of  the  survivors  to  suc- 
ceed to  his  share  instead  of  its  descending  to  his  heirs.  On  ac- 
count of  this  feature,  joint  ownership  is  not  favored  in  our  law, 
and  an  express  declaration  to  that  effect  is  necessary  to  raise  a 
joint  ownership. 

OWNERSHIP  IN  COMMON  differs  from  joint  ownership 
•sin  not  having  the  right  of  survivorship.  The  ownership  is  still 
between  several  persons  and  of  undivided  shares. 

PARTNERSHIP  INTERESTS  are  "those  held  by  several  persons 
in  partnership  for  partnership  purposes. 

COMMUNITY  INTERESTS.  All  property  owned  by  either  hus- 
band or  wife  before  marriage  and  all  property  acquired  after 
marriage  by  either,  by  gift,  bequest,  devise  or  descent,  together 
with  the  rents,  issues  and  profits  thereof,  is  *°the  separate  property 
of  such  spouse.  All  other  property  acquired  after  marriage  by 
either  husband  or  wife,  or  both,  is  community  property. 

The  husband  has  the  management  and  control  of  the 
community  property,  with  the  like  absolute  power  of  dispo- 
sition, other  than  testamentary,  as  he  has  of  his  separate  estate; 
provided,  however,  that  he  cannot  make  a  gift  of  such  commu- 
nity property  or  convey  the  same  without  a  valuable  considera- 
tion, unless  the  wife,  in  writing  consent  thereto.  Inasmuch 
as  the  recital  of  the  consideration  in  a  deed  is  never  conclu- 
sive, it  is  therefore  advisable,  in  order  to  make  a  good  record 
title,  that  the  wife  should  join  with  the  husband  in  all  convey- 
ances of  real  property.  The  separate  property  of  the  wife  is 


IN  TROD  UC  TION.  11 

under  her  control,  and  she  may  manage  it,  and  contract  with 
regard  to  it,  or  bequeath  it  by  will,  in  the  same  manner  as  if 
single,  without  intert'erence  by  the  husband. 

On  the  death  of  the  wife  the  entire  community  property 
becomes  the  property  of  the  husband;  on  the  death  of  the 
husband  one-half  becomes  the  property  of  the  wife  and  the 
other  half  may  be  disposed  of  by  the  husband  by  will;  or  if 
the  husband  dies  intestate  the  other  half  goes  to  his  heirs  at 


QUESTIONS. 


LAW   DEFINITIONS. 

1.  What  is  a  law? 

2.  What  is  municipal  law  ? 

3.  What  is  the  presumption  in  regard  to  knowledge  of  law  ? 

4.  What  is  a  State? 

5.  What  bodies  of  law  constitute  the  municipal  law  of  any  one  of 
the  United  States  ? 

FORMS   OF   LAW. 

6.  What  are  the  two  forms  of  law  ? 

7.  What  is  the  Common  Law? 

8.  What  is  the  Written  Law  ? 

9.  What  is  a  Statute  ? 

10.  What  is  a  Constitution,  as  understood  in  this  country  ? 

11.  What  is  the  difference  between  a  Constitution  and  a  Statute? 
(Ans.     The  former  is  enacted  by  the  people;  the  latter  by  theii 

representatives.     The  former  controls  the  lattei.) 

12.  In  what  are  most  of  the  California  Statutes  contained? 

13.  What  is  a  Code? 

14.  How  many  Codes  are  there  in  California  ? 

15.  Name  them. 

16.  What  is  contained  in  the  Civil  Code  ? 

PROPERTY. 

17.  What  is  property  ? 

1 8.  What  is  ownership? 

19.  What  are  the  two  great  divisions  of  property  ? 

20.  What  does  real  property  include  ? 

21.  What  does  personal  property  include? 

22.  Who  may  own  property  in  this  State  ? 

23.  What  is  the  duty  attached  to  the  ownership  of  all  property  ? 

24.  How  may  property  be  held? 

25.  State  the  modes  in    which   property  may  be   held   by  several  per- 
sons. 

26.  When  does  joint  ownership  exist  ?    . 

27.  What  is  its  distinguishing  feature  ? 

28.  How  does  ownership  in  common  differ  from  joint  ownership? 

29.  What  are  partnership  interests  ? 

30.  What  are  community  interests  ? 

31.  Who  controls  the  community  property? 


PART  1. 

GENERAL  FEATURES  OF  CONTRACTS. 


CHAPTER  I. 

FORMATION    AND   CLASSIFICATION. 

A  CONTRACT  Is  \AN  AGREEMENT,  FOR  A  CONSIDERA- 
TION, TO  DO  OR  NOT  TO  DO  A  CERTAIN  THING. 

Analyzing  this  definition,  the  elements  of  a  contract  are: 
'An  Agreement,  a  Consideration,  and  a  Subject-matter.  These 
we  will  consider  in  their  order. 

AN  AGREEMENT  necessarily  implies  more  than  one  party., 
A  man  cannot  enter  into  a  contract  with  himself;  there  must  be 
somebody  to  agree  with.  On  the  other  hand  there  is  no  limit 
to  the  number  of  parties  there  may  be  to  a  contract.  Before 
these  parties  can  come  to  any  agreement  there  must  be  first 
an  offer  by  one  and  then  an  acceptance  by  the  other.  The 
divisions  of  an  agreement  then  are:  "Parties,  an  Offer,  and  an 
Acceptance.  The  parties  to  a  contract  will  be  considered 
fully  in  Part  II.  - 

AN  OFFER  may  be  made  4orally  or  in  writing,  and  it  is  not 
even  necessary  that  it  should  be  in  words;  an  offer  may  be 
implied  by  acts,  and  after  acceptance  form  a  valid  contract. 

The  offer  must  be  DEFINITE  WITH  REGARD  TO  THE  SUBJECT. 
MATTER;  for,  if  it  is  not  clearly  ascertained  what  the  agreement 
is  about,  to  contract  would  be  idle,  for  it  could  not  be  enforced. 
But  6there  is  no  such  necessity  with  regard  to  the  person  to 
whom  the  offer  is  made.  An  offer  may  be  general,  and,  in 
such  case,  might  be  accepted  by  any  person. 

<J3) 


14  GENERAL  FEATURES  OF  CONTRACTS. 

'Any  conditions  prescribing  the  time,  place,  form,  etc.,  of 

;'. ', :  ajccepftanfce,  may  be  made,  and  would  form  a  part  of  the  offer. 

But  no  "condition  as  to  refusal  can  be  made,  for  this  would  be 

equivalent  to  forcing  the  other  party  to  do  some  act  in  order 

to  avoid  entering  into  a  contract. 

An  offer  may  be  withdrawn  "at  any  time  before  accept- 
ance, whether  a  time  for  acceptance  has  been  stated  or  not. 

AN  ACCEPTANCE  may  be  in  any  form;  either  implied  by 
acts  or  expressed  by  words.  wThe  acceptance  must  be  IDEN- 
TICAL WITH  THE  OFFER,  including  any  conditions  which  may 
have  been  made.  An  offer  of  acceptance,  which  differs  from 
the  original  offer,  would  amount  to  a  new  offer,  which  must 
itself  be  accepted  to  constitute  a  valid  contract. 

WHEN  MADE.  When  no  time  of  acceptance  is  pre- 
scribed in  the  offer,  it  must  be  "within  a  reasonable  time. 
What  amounts  to  a  reasonable  time  will  be  determined  from 
the  circumstances  of  each  case. 

BY  MAIL.  When  the  parties  are  not  together,  the  offer 
and  the  acceptance  may  be  by  mail.  In  such  a  case  the 
acceptance  is  complete  12as  soon  as  the  letter  containing  it  is 
put  in  course  of  transmission  to  the  proposer.  It  is  not  neces- 
sary that  either  the  offer  or  the  acceptance  should  be  contained 
in  one  letter;  they  may  be  in  several. 

THE  CONSIDERATION  Is  "THE  PRICE,  OR  MATTER  OF 
INDUCEMENT  TO  THE  CONTRACT. 

Without  a  consideration  there  can  be  no  contract;  the 
agreement  is  a  mere  voluntary  promise  which  cannot  be 
enforced  at  law.  A  gift  is  of  course  valid,  if  it  does  not 
defraud  creditors,  but,  until  there  is  a  change  of  possession,  it 
may  be  revoked. 

The  consideration  is  essentially  the  same  as  the  subject- 
matter  of  the  proposer's  contract.  A  contract  is,  in  reality, 
two  agreements,  in  which  the  consideration  of  the  one  is  the 
subject-matter  of  the  other.  As  a  general  rule,  however,  the 
money-price  is  called  the  consideration,  and  the  service  or 
commodity,  the  subject-matter. 


GENERAL  FEATURES  OF  CONTRACTS.  15 

A  consideration  may  be  "either  a  benefit  conferred  upon 
the  promiser,  or  a  prejudice  suffered  by  the  promisee. 

A  consideration  is  either  good  or  valuable. 

A  GOOD  CONSIDERATION  Is  "THAT  OF  BLOOD  RELA- 
TIONSHIP OR  NATURAL  TIES. 

A  good  consideration  is  sufficient  to  support  a  contract 
which  has  been  performed  when  not  in  fraud  of  creditors,  but 
a  promise  made  for  a  good  consideration  cannot  be  enforced. 

A  VALUABLE  CONSIDERATION  Is  "THAT  OF  MONEY  OR  ITS 
EQUIVALENT,  OR  OF  MARRIAGE. 

While  the  consideration  must  have  some  value,  the 
amount  "is  not  material,  and  the  adequacy  of  the  considera- 
tion will  not  be  inquired  into.  A  contract  based  upon  some 
supposed  danger  which  does  not  exist  could  not  be  enforced, 
for  the  consideration  would  have  no  value  at  all.  When  the 
consideration  is  insufficient,  f.  *.,  when  it  is  neither  good  nor 
valuable,  there  is  no  consideration  at  all. 

The  following  cases  of  sufficient  consideration  are  treated 
by  Parsons:  prevention  of  litigation;  forbearance  to  sue; 
assignment  of  debt;  work  and  service;  trust  and  confidence; 
mutual  promises;  and  subscriptions. 

A  MORAL  DUTY  is  a  sufficient  consideration  "to  support  a 
promise  corresponding  in  extent  with  the  duty,  but  no  further 
or  otherwise. 

A  consideration  which  is  "UNLAWFUL,  IMMORAL,  OR  IM- 
POSSIBLE, is  not  sufficient  to  support  a  contract.  Extreme 
inconvenience  of  difficulty  or  financial  inability  would  not  of 
itself  render  a  consideration  impossible;  "it  must  be  in  its  own 
nature  and  obviously  impossible. 

\The  Subject-Matter. — THE  SUBJECT-MATTER  Is  *THI 
THING  TO  BE  DONE  OR  NOT  TO  BE  DONE. 

The  general  rule  is  that  "anything  may  be  made  the  sub- 
ject of  a  contract.  There  are  four  classes  of  exceptions,  viz.: 
"Where  the  subject  of  the  contract  is  Immoral,  Illegal,  Impol- 
itic, or  Fraudulent. 


16  GENERAL  FEATURES  OF  CONTRACTS. 

IMMORAL  CONTRACTS  will  not  be  enforced  in  law.  The 
law  does  not  interfere  to  rescind  such  contracts,  but  it  will  not 
lend  its  assistance  to  their  enforcement.  The  immorality  must, 
however,  be  of  a  decided  character,  or  the  ordinary  rules  of 
law  will  not  be  changed. 

ILLEGAL  CONTRACTS  are  those,  the  subject  of  which  is 
prohibited  by  Statute.  It  is  not  necessary  that  such  contracts 
should  be  declared  void  by  the  Statute;  if  the  subject  is  pro- 
hibited, that  is  sufficient. 

IMPOLITIC  CONTRACTS,  or  those  contrary  to  public  policy, 
will  not  be  enforced.  Contracts  in  restraint  of  trade,  or  of 
marriage,  or  to  influence  officials  in  their  official  acts  are 
examples  of  this  class. 

FRAUD  taints  any  transaction  into  which  it  enters.  It  is" 
specially  guarded  against  by  law.  Not  only  is  there  a  refusal 
to  enforce  contracts  in  which  the  element  of  fraud  appears, 
but  it  is  attempted  to  remove  the  temptation  to  fraud  in  alter- 
ing the  terms  of  a  contract  already  entered  into;  this  latter 
provision  is  included  in  what  is  known  as  the  Statute  of  Frauds. 

Fraud  may  be  either  Actual  or  Constructive. 

ACTUAL  FRAUD  exists  in  five  cases: — 

1.  '24When  a  fact,  which  is  actually  untrue,  is  suggested  as 
true  by  one  who  does  not  believe  it  to  be  true. 

2.  When  a  fact  which  is  actually  untrue,    is   positively 
asserted  as  true,  by  one  who  has  no  reasonable  ground  for 
believing  it  to  be  true. 

3.  When  a  promise  is  made  without  the  intention  of  per- 
forming it. 

4.  When  a  material  fact  is  concealed  by  one  upon  whom 
a  legal  duty  of  disclosing  it  rests. 

5.  When  there  is  any  other  act  fitted  to  deceive. 

It  is  essential  in  all  cases  tothat  the  fact  should  be  untrue, 
and  that  it  should  be  material,  L  e.t  such  that,  without  the 
assertion  of  the  fact,  the  contract  would  not  have  been  entered 
into. 


GENERAL  FEATURES  OF  CONTRACTS.          17 

"The  assertion  must  be  of  a  fact,  and  not  merely  of  an 
opinion. 

"The  assertion  must  be  made  with  the  intention  that  the 
other  party  shall  act  upon  it;  it  must  be  such  as  to  justify  him 
in  acting  upon  it,  and  he  must  actually  do  so,  in  order  to  con- 
stitute fraud. 

CONSTRUCTIVE  FRAUD  exists  "where  there  is  any  breach  of 
duty,  which,  without  fraudulent  intent,  results  in  an  advantage 
being  gained  over  the  other  party. 

REMEDY.  Where  a  contract  has  been  induced  through  fraud, 
"it  may  be  enforced  or  rescinded  at  the  option  of  the  defrauded 
party. 

*°A  DEFRAUDED  PURCHASER  has  his  choice  between  two 
courses. 

a.  He   may  enforce   the   contract   and   claim   damages    for 
deceit;  or, 

b.  He  may   rescind   the   contract,   returning  the  goods,   if 
there  has  been  a  delivery.     In   this   case  he  may   recover   the 
purchase  price  if  it  has  been  paid.     Rescission  on  the  ground 
of  fraud  must  be  immediate  on  its  discovery. 

A  DEFRAUDED  SELLER  ^may  enforce  the  contract,  or 
recover  the  goods  or  their  equivalent  at  his  option. 

As  a  fraudulent  contract  is  voidable  only,  and  not  void, 
*2a  subsequent  purchaser,  without  knowledge  of  the  fraud,  and 
paying  a  valuable  consideration,  acquires  a  good  title. 

FRAUD  AGAINST  CREDITORS.  Where  a  contract  is  entered  into 
for  the  purpose  of  defrauding  creditors,  or  other  third  parties, 
Mit  may  be  set  aside  by  such  defrauded  parties. 

THE  STATUTE  OF  FRAUDS.  The  Statute  of  Frauds  seeks  to 
prevent  fraud,  rather  than  to  punish  it  after  it  has  been  com- 
mitted ;  by  requiring  84that  certain  contracts  shall  always  be 
evidenced  by  a  writing,  signed  by  the  party  to  be  charged  there- 
with. The  statute  does  not  declare  contracts  not  so  evidenced 
void,  but  says  that  they  will  not  be  enforced. 

There  are  six  classes  of  contracts  included  within  the  pro- 
visions of  this  statute: — 
2 


18      /  GEXiirtAL   FEATURES   OF   CONTRACTS. 

1.  "An  agreement,  which,  by  its  terms,  is  not  to  be  performed 
within  one  year  from  the  making  thereof,  or  within  the  lifetime 
of  the  promissor. 

2.  An  agreement  to  answer  for  the  debt,  default,  or  mis- 
carriage of  another. 

3.  An  agreement   made   in   consideration   of   marriage,  ex- 
cept a  mutual  agreement  to  marry. 

4.  An   agreement   for  the  sale  of  personal  property,  at  a 
price  not  less  than  $200,  unless  there  is  a  performance  or  part 
performance  of  the  obligation  on  either  side. 

5.  An  agreement  for  the  sale  of  real  property  or  any  interest 
therein. 

6.  An  agreement  authorizing  a  broker  or  agent  to  buy  or 
real  estate  for  a  commission. 

Under  the  fourth  class  there  are  two  things  which  will  take 
the  case  out  of  the  influence  of  the  statute:  ""Delivery  and  Ac- 
ceptance of  the  goods,  or  Payment  or  Part  Payment  of  the  price. 

DELIVERY  AND  ACCEPTANCE.  It  is  necessary,  OTnot  only  that 
there  should  be  a  delivery  by  the  seller,  but  also  an  acceptance 
by  the  buyer. 

In  order  to  amount  to  a  DELIVERY  there  must  be  "'some  act 
clearly  showing  an  intention  to  change  the  ownership  of  the 
goods ;  mere  words  are  not  sufficient. 

ACCEPTANCE  is  S9some  act  by  the  buyer  showing  an  intention 
to  keep  the  goods,  performed  after  he  has  the  power  of  rejection. 
4"It  is  not  material  whether  the  acceptance  is  before  or  after  the 
delivery  of  the  goods. 

Delivery  and  acceptance  may  be  to  and  by  an  agent,  "when 
this  is  within  the  scope  of  the  agent's  authority. 

PAYMENT  and  PART  PAYMENT  take  a  case  out  of  the 
action  of  the  Statute  of  Frauds.  They  are  fully  considered 
later. 

The  NOTE  OR  WRITING,  to  take  the  case  out  of  the  action 
of  the  statute,  need  not  be  in  any  particular  form;  "it  may  be 
on  one  paper  or  on  several.  The  terms  of  the  agreement,  the 


GENERAL  FEATURES  Of"  CONTRACTS.  19 

parties,  subject-matter,  and  any  conditions  as  to  time,  place  of 
performance,  etc.,  must  appear. 

Where  the  agreement  is  evidenced  by  several  papers,  they 
must  be  connected  ^by  reference  from  one  to  the  other,  and 
the  reference  must  be  *4from  that  which  is  signed  to  that  which 
is  unsigned. 

The  writing  may  be  made  ttat  any  time  before  the  suit  is 
brought,  and  must  be  signed  by  the  party  to  be  bound.  It  is 
not  necessary  that  the  other  party  should  sign,  though  he 
should  be  sufficiently  identified.  Actual  subscription,  /.  *., 
signing  at  the  end^af the  instrument,  by  the  party  to  be  bound 
is  advisable.  / 

Classes. — With  regard  to  their  form,  contracts  are  either 
^WRITTEN  or  UNWRITTEN. 

The  chief  difference  between  a  contract  in  writing  and 
one  not  in  writing,  is  that  *7in  the  case  of  the  former  the  pro- 
visions may  not  be  changed  by  evidence  outside  of  the  writing 
itself.  We  have  already  seen  that  certain  contracts  must 
always  be  evidenced  in  writing. 

With  regard  to  their  creation,  contracts  are  either  "EX- 
PRESS or  IMPLIED. 

AN  EXPRESS  CONTRACT  Is  *'ONE  THE  TERMS  OF  WHICH 
ARE  EXPRESSED  IN  WORDS,  WRITTEN  OR  SPOKEN. 

AN  IMPLIED  CONTRACT  Is  M()NE  WHICH  REASON  AND 
JUSTICE  DICTATE  FROM  THE  CIRCUMSTANCES,  AND  WHICH 
THE  LAW  THEREFORE  PRESUMES  THAT  THE  OBLIGOR  UNDER- 
TAKES TO  PERFORM. 

With  regard  to  their  performance,  contracts,  or,  more  prop- 
erly, the  obligations  created  by  them,  are  "EXECUTED  or  EXE- 
CUTORY. 

AN  EXECUTED  OBLIGATION  Is  ONE  ALREADY  PER- 
FORMED; AN  EXECUTORY  OBLIGATION  Is  ONE  YET  TO  BE  PER- 
FORMED. 

An  executory  obligation  may  be  CONDITIONAL,  i.  *.,  Mae^ 
pendent  on  the  happening  of  some  event;  and  such  condition 
may  be  precedent,  concurrent,  or  subsequent. 


20  GENERAL  FEATURES  OF  CONTRACTS. 

A  CONDITION  PRECEDENT  is  one  which  must  happen  her , 
fore  the  obligation  comes  into  existence. 

A  CONCURRENT  CONDITION  is  one  which  must  be  per- 
formed at  the  same  time  as  the  dependent  obligation. 

A  SUBSEQUENT  CONDITION  is  one  which  is  to  be  per- 
formed after  the  making  of  the  contract. 

A  breach  of  a  subsequeiu  condition  "renders  the  contract 
voidable,  but  not  actually  void. 

A  condition  which  is  ^UNLAWFUL,  IMMORAL  or  IMPOSSI- 
BLE, is  void.  If  the  condition  was  precedent  the  contract  it- 
self is  void,  if  subsequent  the  ownership  becomes  absolute. 

Conditions  M  which  are  possible  at  the  time  of  the  for- 
mation of  the  contract,  but  which  afterwards  become  impossi- 
ble by  act  of  God,  or  of  the  person  in  favor  of  whom  the  obliga- 
tion exists,  are  void. 

Conditions  "repugnant  to  the  interest  created,  and  those 
in  restraint  of  marriage,  are  void. 

A  condition  involving  forfeiture  is  interpreted  "strictly 
against  the  person  in  whose  favor  it  exists. 


QUESTIONS. 


FORMATION   OF   CONTRACTS. 

1.  What  is  a  contract  ? 

2.  What  are  the  elements  of  a  contract  ? 

AGREEMENT. 

3.  What  are  the  divisions  of  an  agreement  ? 

4.  In  what  form  may  an  offer  be  made  ? 

5.  With  regard  to  the  subject,  how  must  the  offer  be? 

6.  Is  there  such  a  necessity  with  regard  to  the  person  to  whom  the 
offer  is  made  ? 

7.  What  conditions  may  be  included  in  the  offer? 

8.  What  conditions  may  not  be  included  ? 

9.  When  may  an  offer  be  withdrawn  ? 

10.  Must  the  acceptance  be  identical  with  the  offer  ? 

11.  When  must  an  offer  be  accepted? 

12.  When  is  an  acceptance  by  mail  complete? 

CONSIDERATION. 

13.  What  is  a  consideration? 

14.  What  may  a  consideration  be? 

15.  What  is  a  good  consideration? 

16.  What  is  a  valuable  consideration? 

17.  Is  the  value  of  the  consideration  material? 

18.  To  what  extent  is  a  moral  duty  a  sufficient  consideration? 

19.  What  considerations  are  insufficient  ? 

20.  What  is  necessary  to  render  a  consideration  impossible  ? 

SUBJECT-MATTER. 

21.  What  is  the  subject-matter  of  a  contract? 

22.  What  may  be  the  subject  of  a  contract  ? 

23.  What  are  the  classes  of  exceptions  to  this? 

(21) 


QUESTIONS. 


FRAUD. 

14.  What  are  the  fire  cases  in  which  actual  fraud  exists? 
35.  What  is  essential  in  addition  ? 
26  and  27.  What  are  the  other  essentials  of  fraud  ? 

28.  Where  does  constructive  fraud  exist? 

29.  What  is  the  remedy  in  case  of  a  fraudulent  contract  ? 

30.  What  courses  may  a  defrauded  purchaser  take? 

31.  What  remedy  has  a  defrauded  seller  ? 

32.  Who  may  obtain  a  good  title,  where  fraud  has  entered  into  a  con- 
tract ? 

33.  What  may  be  done  where  a  contract  has  been  entered  into  for  the 
purpose  of  defrauding  third  parties  ? 

THE  STATUTE  OF  FRAUDS. 

34.  What  does  the  Statute  of  Frauds  require  ? 

35.  What  six  classes  of  contracts  are  included  under  the  statute? 

36.  W  hat  will  take  cases  of  the  fourth  class  out  of  the  opiaation  of 
the  statute  ? 

37.  What  is  necessary  in  the  first  case  ? 

38.  What  would  amount  to  a  delivery? 

39.  vVhat  is  an  acceptance  ? 

40.  Is  an  acceptance  before  delivery  sufficient? 

41.  When  may  delivery  and  acceptance  be  to  and  by  an  agent  ? 

42.  Must  the  note  or  writing  be  entirely  on  one  pper? 

43.  When  the  agreement  is  evidenced  by  several  papers,  how  should 
they  be  connected  ? 

44.  How  should  the  reference  be  ? 

45.  When  may  the  writing  be  made  ? 

CLASSES. 

46.  What  are  the  two  principal  forms  of  contracts? 

47.  What  is  the  difference  between  a  written  and  unwritten  contract  ? 

48.  What  are  the  two  classes  of  contracts  with  reg.rd  to  their  crea- 
tion? 

49.  What  is  an  express  contract  ? 

50.  What  is  an  implied  contract? 

51.  How  are  contracts  <!.\i<|.  <|.  with  regard  to  their  performance? 

52.  What  i*  *  conditional  <>l>lk-ntion? 

53.  What  is  the  result  ol  the  breach  of  a  subsequent  condition? 

54.  What  conditions  are  vukl  ? 

55.  \\  hat  other  conditions  are  void? 

56.  Waat  others? 

57.  How  is  a  condition  involving  forfeiture  interpreted  ? 


CHAPTER  II. 

CONSTRUCTION  OF  CONTRACTS. 

THE  CONSTRUCTION  OF  A  CONTRACT  Is  "THE  MEANING 
WHICH  WILL  BE  GIVEN  TO  THE  ENTIRE  AGREEMENT. 

The  construction,  which  looks  at  the  spirit  rather  than  the 
letter,  "is  broader  than  a  mere  interpretation.  The  following 
rules  of  construction  are  prepared  from  those  laid  down  in  the 
Code. 

RULES  OF  CONSTRUCTION. 

I.  That  construction,  will  be  given  to  a  contract,  which, 
without  violating  the  rules  of  law,  or  of  language,  will  most 
nearly  express  *THE  INTENTION  OF  THE  PARTIES,  at  the  time  of 
entering  into  the  contract. 

II.  If  a  contract  is  plain  and  certain  when  the  words  are 
taken  4in  their  ORDINARY  AND  POPULAR  SENSE,  all  its  words 
shall  be  so  taken;  unless  "the  instrument  itself  shows  that  they 
were  used  in  a  TECHNICAL  SENSE,  when  such  technical  sense 
will  be  given  to  them. 

III.  When,  through  FRAUD,  MISTAKE  OR  ACCIDENT,  the 
written  instrument  fails  to  express  the  intent  of  the  parties, 
'that  intent   is  to  be   regarded  and   the  erroneous  parts  dis- 
regarded. 

IV.  The  construction  of  a  contract  is  to  be  FAVORABLE; 
f.  c.,  Tsuch  as  will  make  it  lawful,  reasonable  and  capable  of  being 
carried  into  effect. 

V.  *The  WHOLE  of  a  contract,  and  EVERY  PART  thereof 
should  be  made  effective;  but  a  part  must  be  subordinated  to 
the  intent  of  the  whole. 

VI.  REPUGNANCIES  "must,  if  possible,  be  reconciled  by 

(23) 


24  CONSTRUCTION  OF  CONTRACTS. 

such  construction  as  will  give  effect  to  the  repugnant  clauses 
in  accordance  with  the  general  intent  of  the  contract.  Where 
they  cannot  be  so  reconciled,  "they  must  be  rejected. 

VII.  GENERAL  AND  SWEEPING  CLAUSES  are  to  be  limited 
and  controlled  nby  special  ones. 

VIII.  In  cases  of  AMBIGUITY  AND  UNCERTAINTY  the  con- 
tract should  be  interpreted  "most  strongly  against  the  prom* 


IX.  LEGAL  PRESUMPTIONS  "will  supply  the  want  of  ex- 
press provisions,  but  cannot  control  that  which  is  expressed. 

X.  USAGE  OR  CUSTOM  becomes  a  part  of  a  contract  "only 
when  it  is  so  far  established  and  known  to  the  parties  that  it 
must  be  supposed  that  the  contract  was  made  with  reference 
to  it. 

XI.  When  a  contract  is  plain  and  intelligible  EXTRINSIC 
EVIDENCE  lsmay  be  admitted  to  explain,  but  not  to  vary  its 
terms. 

When  the  contract  is  uncertain,  16the  intention  may  be 
ascertained  by  extrinsic  evidence,  but,  if  such  intention  be  in- 
compatible with  a  fair  and  rational  interpretation  of  the  words, 
the  contract  is  void. 

XII.  Those  parts  of  a  contract  which  are  "ORIGINAL  con- 
trol those  which  are  copied  5rom  a  form. 

XIII.  A  WRITTEN  INSTRUMENT  '"supersedes  all  oral  ne- 
gotiations or  stipulations,  which  preceded  or  accompanied  the 
execution. 

XIV.  "A  contract  is  to   be  construed  according  to  the 
law  and  usage  of  the  PLACE  OF  PERFORMANCE;  or,  if  no  place 
of  performance  is  indicated,  the  law  of  the  place  of  making 
controls. 

XV.  28If  the  TIME  OF  PERFORMANCE  is  not  expressed,  a 
reasonable  time  is  allowed;  if  the  obligation  is  capable  of  imme- 
diate performance  it  must  be  done  instantly. 


QUESTIONS. 


1.  What  is  meant  by  the  construction  of  a  contract? 

2.  How  does  construction  differ  from  interpretation? 

3.  What  is  the  thing  sought  for  in  the  construction  of  a  contract  ? 

4.  In  v.  hat  sense  are  the  words  of  a  contract  taken  ? 

5.  Wher.  will  they  be  taken  in  a  technical  sense? 

6.  When  through  fraud,  mistake  or  accident  the  instrument  fails  to 
express  the  intent,  what  is  done  ? 

7.  What  is  a  "favorable"  construction  of  a  contract? 

8.  What  part  of  a  contract  should  be  made  effective? 

9.  What  must  be  done  with  repugnancies  ? 

10.  When  they  cannot  be  reconciled,  what  must  be  done? 

11.  How  are  general  and  sweeping  clauses  controlled? 

12.  How  should  the  contract  be  interpreted  in  cases  of  ambiguity  and 
uncertainty  ? 

13.  What  about  legal  presumptions? 

14.  When  does  usage  or  custom  become  a  part  of  a  contract? 

15.  What  is  the  rule  as  to  extrinsic  evidence  when  the  contract  if 
plain  and  intelligible  ? 

16.  When  the  contract  is  uncertain,  what  is  the  rule? 

17.  When  the  contract  is  partly  original  and  partly  copied  from  • 
form,  which  controls  ? 

18.  What  is  the  force  of  a  written  instrument? 

19.  What  is  the  law  of  place  ? 

20.  What  is  the  rule  as  to  time  of  performance? 

(26) 


CHAPTER  III. 

EXTINCTION   OF   CONTRACTS. 

The  obligation  created  by  a  contract  may  be  extinguished 
by:  Performance,  Offer  of  Performance,  Release,  Rescission, 
Set-off,  or  the  lapse  of  a  certain  time,  as  provided  in  the  Stat- 
ute of  Limitations,  of  these  each  in  their  order. 

Performance. — Performance,  according  to  the  contract, 
of  course  extinguishes  the  obligation. 

WHO  MAY  PERFORM.  Performance  may  be  by  lthe  party 
whose  duty  it  is  to  fulfill  the  obligation,  or  by  his  agent,  or  by 
any  third  person  on  behalf  of  such  party.  But  in  the  last  case 
vthere  must  be  a  subsequent  ratification  of  the  act  by  the  party 
bound. 

Performance  may  be  to  'the  creditor,  or  to  his  agent  au- 
thorized to  receive  it.  It  is  necessary  that  the  receipt  of  the 
goods  or  money,  as  the  case  may  be,  should  be  within  the 
scope  of  the  agent's  authority  or  the  obligation  will  not  be  ex- 
tinguished. Where  the  obligation  exists  in  favor  of  several 
persons  jointly,  a  performance  to  one  would  extinguish  it  as 
to  all. 

How  MADE.  Where  the  obligation  is  to  pay  money,  a 
delivery  of  a  promissory  note  or  a  check  is  6not  an  absolute 
payment,  until  the  note  or  check  is  paid. 

A  payment  may  be  by  letter  6when  that  is  the  ordinary 
Bourse  of  business,  or  when  a  request  or  agreement  by  the 
other  party  to  that  effect  can  be  shown.  A  payment  so  made 
is  complete  7when  the  letter  is  put  into  the  post,  whether  it 
ever  reaches  its  destination  or  not. 

Where   the   promise  is  in  the  alternative,  as  to   deliver 

(26) 


EXTINCTION  OF  CONTRACTS.  27 

pxxls  or  pay  a  sum  of  money,  "the  party  who  is  to  do  the  first 
art  has  the  choice.  If  he  does  not  select  'before  the  time  for 
performance  has  passed,  the  other  party  is  entitled  to  demand 
the  money. 

TIME.  If  no  time  of  performance  is  specified,  it  must  be 
"within  a  reasonable  time.  What  would  be  a  reasonable  time 
is  to  be  determined  "from  the  circumstances  of  each  case. 
If  it  is  capable  of  instant  performance,  "it  must  be  done  im- 
mediately. 

If  the  time  of  performance  is  specified,  "it  must  be  at 
that  time,  within  reasonable  hours,  and  not  before  or  after. 

Where  work  is  to  be  performed  within  a  givon  time,  a 
failure  to  perform  within  that  time  is  14not  an  absolute  breach 
of  the  contract,  but  "renders  the  party  liable  for  damages. 

The  time  in  which  any  act  is  to  be  done  is  computed  ieby 
excluding  the  first  day,  or  day  of  making  the  contract,  and  in- 
cluding the  last.  When  the  last  day  falls  on  Sunday,  or  a 
holiday,  "the  act  must  be  performed  on  the  following  business 
day.  Fractions  of  a  day  are  "not  recognized  in  law. 

PLACE.  tln  the  absence  of  an  express  provision  to  the 
contrary  performance  may  be  "to  the  creditor,  wherever  he  is 
to  be  found,  or  at  any  place  appointed  by  him. 

If  the  creditor  cannot  be  found  within  the  State,  *per- 
formance  may  be  at  his  residence  or  place  of  business. 

Where  there  are  several  debts  owed  by  one  person  to  an- 
other, and  a  payment  is  made  which  is  not  sufficient  to  extin- 
guish all,  althe  person  paying  has  the  first  election  as  to  how 
the  money  is  to  be  applied.  Should  he  not  elect  the  creditor 
may  apply  it  "to  any  debt  due  at  the  time  of  payment.  If 
neither  elect  within  a  reasonable  time  the  law  will  apply  it  '^ac- 
cording to  the  equity  and  justice  of  the  case. 

PART  PERFORMANCE.  A  partial  performance,  the  benefit 
of  which  is  voluntarily  retained  by  the  other  party,  is  a  "satisfac- 
tion of  the  indebtedness  pro  tanto.  ''Where  the  benefit  cannot 
be  rejected  without  injury,  the  retention  is  not  considered  volun- 

tarv 


28  EXTINCTION  OF  CONTRACTS. 

A  partial  performance,  made  before  the  obligation  is  due, 
or  in  any  mariner  more  beneficial  to  the  creditor,  if  accepted, 
26would  extinguish  the  obligation. 

'  A  partial  performance,  made  after  the  breach  of  the  obli- 
gation, and  27expressly  received  in  writing,  in  satisfaction,  ex- 
ishes  tbe  debt. 

|Fer  of  Performance. — An  offer  of  performance,  when 
properly  made,  is  as  effectual  as  an  actual  performance,  even 
when  refused  by  the  creditor.  However,  an  offer  of  perform- 
ance must  be  kept  good,  i.  e.,  33the  party  must  be  at  all  times 
ready  and  willing  to  perform. 

An  offer  of  performance  may  be  by  and  to  28the  same  per- 
sons as  in  an  actual  performance. 

How  MADE.  The  offer  must  be  made  29in  good  faith, 
and  in  such  manner  as  would  be  most  likely  to  benefit  the 
creditor,  and  it  must  be  free  from  any  conditions  which  the 
creditor  is  not.  bound  to  perform. 

If  the  obligation  is  to  pay  money,  30the  amount  must  be 
deposited  in  a  bank  of  good  repute,  to  the  credit  of  the  other 
party,  and  notice  must  be  given  to  him,  in  order  to  extinguish 
the  obligation;  but  an  offer  without  deposit  is  sufficient  to 
31stop  the  running  of  interest.  An  offer  of  more  money  than  is 
due  is  sufficient  unless  accompanied  by  a  demand  for  the  bal- 
ance, and  the  offer  is  refused  on  that  ground. 

That  an  offer  of  chattels  may  be  sufficient  it  must  be  sepa- 
rated and  identified  from  all  other  goods  of  the  same  kind,  so 
that  the  other  party  has  nothing  to  do  but  to  signify  his  ac- 
ceptance. 

If  the  obligation  is  in  the  alternative,  at  the  option  of  the 
creditor,  32the  offer  must  be  of  both. 

TIME.  An  offer  of  performance  may  be  on  the  very  day 
that  the  obligation  is  due,  when  the  time  is  fixed.  But  34if  a 
delay  in  performance  is  capable  of  exact  and  entire  compensa- 
tion, and  the  time  has  not  been  expressly  declared  to  be  of  the 
essence  of  the  contract,  an  offer  of  performance  with  compensa- 


EXTINCTION  OF  CONTRACTS.  29 

tion  for  the  delay,  would  be  sufficient  if  made  3oat  any  time 
after  it  is  due  and  before  suit  is  brought. 

PLACE.  An  offer  of  performance  may  be  made  at  the 
same  places  as  a  valid  performance. 

THE  EFFECT  of  an  offer  of  performance  is  88not  to  pass  the 
title  to  the  property,  unless  the  person  making  it  so  desires. 

The  creditor  is  tv^  bound  to  return  anything,  which  he 
receives  by  way  of  performance  but  refuses  to  accept  as  such, 
"until  a  returc  \s  demanded,  but  he  holds  it  subject  to  such  de- 
mand 

WHAT  EXCUSES.  There  are  certain  things  which  excuse 
a  performance  or  offer  of  performance. 

Where  the  performance  is  impossible  88it  will  be  excused. 
But  if  one,  for  a  valuable  consideration,  promise  to  do  that 
which  is  impossible,  but  which  does  not  appear  so  on  its  face, 
he  is  liable  for  damages  for  its  breach  in  the  same  manner  as  if 
it  were  possible.  ,  i 

A  declaration  by  one  party  that  he  will  not  perform  his 
part  of  the  contract,  39if  not  withdrawn  before  the  time  of  per- 
formance, excuses  performance  by  the  other  party. 

So  also  where  peiformance  is  prevented  by  act  of  law,  or 
of  the  other  party;  and  this,  even  though  there  may  be  an 
agreement  to  the  contrary  in  the  contract. 

Where  the  performance  is  prevented  by  act  of  the  other 
party,  the  debtor  is  entitled  **to  all  the  benefits  which  he  would 
have  obtained  under  the  contract. 

Release. — A  RELEASE  Is  4IAN  AGREEMENT  BY  THE 
PARTY  IN  FAVOR  OF  WHOM  THE  OBLIGATION  EXISTS,  TO  DIS- 
CHARGE THE  PARTY  UPON  WHOM  THE  OBLIGATION  RESTS. 

A  release  may  be  42in  any  words  or  form,  so  that  the  in- 
tention clearly  appears.  It  may  be  in  writing  or  oral;  but  aa 
written  release  does  not  require  a  consideration  to  support  it, 
while  an  oral  release  does. 

A  general  release  "would  not  be  extended  to  include  mat- 
ters not  connected  with  its  subject-matter;  nor  would  it  include 


EXTINCTION  OF  CONTRACTS. 


any  claims  unknown  to  the  person  making  it,  at  the  time  of 
execution. 

A  release  may  also  result  "from  the  substitution  of  a  new 
obligation  in  the  place  of  the  old  one. 

A  material  alteration  in  a  contract,  made  without  the 
consent  of  the  party  upon  whom  the  obligation  rests,  "would 
release  the  obligation.  The  alteration  must  be  material,  how- 
ever, or  the  obligation  would  not  be  affected. 

A  contract  may  be  altered  *7by  the  consent  of  the  parties 
if  the  consent  is  in  writing  in  the  case  of  an  oral  contract;  and 
*if  the  alteration  itself  is  in  writing  in  the  case  of  a  written 
contract.  ,/ 

Rescission. — "If  the  consent  of  one  of  the  parties  to  a 
contract  was  obtained  through  fraud,  duress,  menace,  undue 
influence  or  mistake,  it  may  be  set  aside  or  rescinded. 

Undue  influence  is  **such  as  destroys  the  party's  freedom 
of  action,  and  makes  the  act,  in  reality,  more  the  act  of  another 
than  of  himself. 

Mistake  may  be  of  law  or  of  fact. 

A  mistake  of  law  is  ground  for  a  rescission  "only  when  the 
same  mistake  is  made  by  all  of  the  parties,  all  supposing  that 
they  knew  and  understood  it;  or  when  one  party  makes  a  mistake 
of  law,  which  the  others  are  aware  of  and  do  not  attempt  to 
rectify.  In  all  other  cases  a  mistake  of  law  is  no  defence. 

A  mistake  of  foreign  law  is  a  mistake  of  fact. 

When  the  consideration  for  the  promise  becomes  entirely 
roid  from  any  cause;  or,  through  the  fault  of  the  party  as  to 
whom  rescission  is  sought,  in  whole  or  in  part,  6athe  contract 
may  be  rescinded. 

Rescission  of  a  contract  must  be  "prompt  upon  the  dis- 
covery of  the  facts  justifying  it 

The  party  rescinding  must  **return  everything  of  value 
which  he  has  received  under  the  contract. 

\     Set-off. — Where  the  obligation   is  for   the   payment  of 
money,  and  there  is  a  counter  obligation  between  the  same 


EXTINCTION  OF  CONTRACTS.  31 

parties,  one  may  be  set-off  against  the  other,  and  would  extin- 
guish it  pro  tanto. 

The  Statute  of  Limitations. — The  Statute  of  Limita- 
tions is  an  enactment  which  provides  Mthat,  if  an  obligation  is 
not  enforced  within  a  stated  time,  the  Court  will  not  aid  in  its 
enforcement. 

The  effect  of  the  statute  is  not  to  extinguish  the  obliga- 
tion absolutely,  but  Mto  bar  the  remedy.  The  statute  therefore 
is  no  bar  to  an  action  unless  set  up  in  defence. 

The  principal  periods  prescribed  by  the  Statute  of  this 
State,  within  which  actions  must  be  brought,  are  as  follows: — 

Within  "FIVE  YEARS  any  action  connected  with  the  title  to 
real  estate,  whether  for  possession  or  to  recover  the  profits. 

"Any  action  upon  the  judgment  or  decree  of  any  Court  in 
the  United  States. 

""Within  FOUR  YEARS  any  action  based  upon  a  written 
contract  executed  in  this  State. 

Mortgages  come  under  this  class,  and  the  limitation  ex- 
pires at  the  end  of  four  instead  of  five  years. 

Within  THREE  YEARS,  wany  action  for  taking,  detaining 
and  injuring  personal  property,  including  actions  for  the  spe- 
cific recovery  thereof. 

Any  action  for  relief  on  the  ground  of  fraud  or  mistake. 
Where  the  action  is  for  rescission  it  must  be  commenced  im- 
mediately. /// 

Within  TWO  YEARS  "any  action  upon  a  contract  obligation 
or  liability  not  founded  upon  a  written  instrument;  or  founded 
upon  an  instrument  in  writing  executed  without  the  State. 
Actions  upon  an  open  book  account  are  included  in  this  class. 

To  an  action  brought  to  recover  money  or  other  property 
deposited  with  any  bank,  banker,  trust  company  or  Savings 
and  Loan  Society,  "there  is  no  limitation. 

THE  STATUTE  BEGINS  TO  RUN  ""from  the  time  when  a 
cause  of  action  first  exists;  /.  i.,  as  soon  as  a  suit  could  be 
brought. 


32  EXTINCTION  OF  CONTRACTS 

In  an  open  book  account  the  statute  begins  to  run  "from  the 
date  of  each  charge. 

The  statute  does  not  begin  to  run  66against  a  minor,  insane 
person,  or  one  deprived  of  civil  rights  until  the  removal  of  the 
disability.  Where  the  person  to  be  charged  is  absent  from  the 
state  when  the  cause  of  action  accrues,  the  running  of  the  statute 
is  suspended  until  his  return. 

Where  the  statute  has  commenced  to  run  ""its  running  is  r.^t 
suspended  by  any  subsequent  disability  or  absence  from  the  State. 

The  statue  may  be  waived  CTby  the  party  to  be  charged.  A 
promise  to  pay  a  debt  barred  by  the  statute  of  limitations  need 
not  be  supported  by  a  new  consideration.  A  party  sued  upon  an 
obligation  barred  by  the  statute  is  deemed  to  have  waived  the 
statute  if  he  does  not  plead  it  at  his  very  earliest  opportunity. 


QUESTIONS. 


EXTINCTION   OF   CONTRACTS. 

1.  Who  may  perform  the  obligation  of  a  contract  ? 

2.  When   performance  is  by  an  unauthorized  third  party  what  U 
accessary  ? 

3.  To  whom  may  performance  be  made  ? 

4.  Where  there  are  several  joint  obligees,  to  whom  may  performance 
^e  made  ? 

5.  Is  a  delivery  of  a  promissory  note  or  a  check,  a  payment  ? 

6.  When  may  payment  be  by  letter  ? 

7.  When  is  such  a  payment  complete  ? 

8.  When  the  promise  is  in  the  alternative,  who  has  the  choice  ? 

9.  When  must  he  make  his  choice  ? 

10.  When  must  the  performance  be  made,  if  no  time  is  fixed? 

11.  How  is  a  "reasonable  time"  determined? 

12.  If  it  is  capable  of  instant  performance,  what  is  the  rule? 

13.  What  is  the  rule  when  the  time  of  performance  is  specified? 

14.  Is  a  failure  to  perform  within  the  specified  time  a  breach  of  the 
contract  ? 

15.  What  is  its  effect? 

16.  How  is  time  computed  ? 

17.  When  the  last  day  falls  on  Sunday  or  a  holiday  what  is  done? 

18.  Are  fractions  of  a  day  considered  in  law? 

19.  Where  must  an  obligation  be  performed,  in  the  absence  of  an  ex- 
press provision  to  the  contrary  ? 

20.  If  the  creditor  cannot  be  found  within  the  State  what  is  done  ? 

21.  Who  has  the  first  election  in  applying  a  part  payment  of  several 
debts? 

22.  How  is  the  creditor  limited  in  his  application  of  the  money? 

23.  If  neither  elect,  how  will  the  law  apply  the  payment  ? 

PART  PERFORMANCE. 

24.  What  is  the  effect  of  a  partial  performance  of  an  obligation  ? 

(83, 


84  QUESTIONS. 


25.  When  is  the  retention  of  the  benefit  of  a  partial  performance  in* 
voluntary  ? 

26.  What  is  the  effect  of  a  part  performance  made  in  a  manner  more 
beneficial  to  the  creditor  ? 

27.  In  what  form  must  a  part  performance  be  received  after  a  breach, 
hi  order  to  extinguish  the  obligation  ? 

OFFER  OF  PERFORMANCE. 

28.  By  and  to  whom  may  an  offer  of  performance  be  made  ? 

29.  How  must  it  be  made  ? 

30.  If  the  obligation  is  the  payment  of  money  what  must  be  done  to 
extinguish  it? 

31.  What  is  the  effect  of  a  simple  offer  of  money,  without  deposit? 

32.  When  the  obligation  is  in  the  alternative  at   the  option  of  the 
creditor,  what  must  the  offer  be? 

33.  What  is  meant  by  keeping  the  offer  good  ? 

34.  When  is  an  offer  after  the  date  of  performance  good  ? 

35.  When  may  such  an  offer,  with  compensation,  be  made  ? 

36.  What  is  the  effect  of  an  offer  of  performance  ? 

37.  How  long  may  an  article  be  kept  which  is  received  by  way  of 
performance,  but  not  accepted  as  such  ? 

38.  When  performance  is  impossible  what  is  done  ? 

39.  What  is  the  effect  of  a  declaration  by  one  party  that  he  will  not 
perform  ? 

40.  Where  performance  is  prevented  by  the  other  party,  to  what  is 
the  debtor  entitled? 

RELEASE. 

41.  What  is  a  release? 

42.  In  what  form  may  a  release  be  ? 

43.  What  is  the  difference  in  force  of  a  written  and  an  oral  release  ? 

44.  How  would  a  general  release  be  interpreted  ? 

45.  From  what  may  a  release  also  result  ? 

46.  What  is  the  effect  of  a  material  alteration  in  a  contract,  made 
without  consent? 

47.  How  may  an  oral  contract  be  altered  ? 

48.  How  in  the  case  of  a  written  contract  ? 

RESCISSION. 

49.  When  may  a  contract  De  rescinded  .- 

50.  What  is  undue  influence  ? 

51.  When  is  a  mistake  of  law  ground  for  rescission? 


QUESTIONS.  35 


52.  What  is  the  effect  when  the  consideration  becomes  void  ? 

53.  When  must  rescission  be  made  ? 

54.  What  must  the  party  rescinding  do  ? 

STATUTE  OP  LIMITATIONS. 

55.  What  does  the  Statute  of  Limitations  provide  ? 

56.  What  is  its  effect? 

.     57.  Within  what  time  must  an  action  connected  with  the  title  to  real 
tttate  be  brought  ? 

58.  Upon  the  judgment  or  decree  of  any  Court  in  the  United  States? 

59.  When  must  an  action  based  upon  a  written  contract  be  brought? 

60.  What  actions  must  be  brought  within  three  years  ? 

61.  What  actions  within  two  years  ? 

62.  What  is  the  limitation  to  actions  brought  to  recover  property  de- 
posited with  a  bank,  etc.  ? 

63.  When  does  the  statute  begin  to  run? 

64.  When  in  an  open  book  account  ? 

65.  Against  whom  does  the  statute  not  run  ? 

66.  When  is  the  running  of  the  statute  suspended? 

67.  How  may  the  statute  be  waived  ? 

68.  By  whom  must  the  new  promise  be  aigned? 


PART  3. 

PARTIES  TO  CONTRACTS. 


CHAPTER  I. 

PARTIES   GENERALLY. 

IN  order  that  there  should  be  a  contract  it  is  necessary  that 
there  should  be  two  or  more  parties. 

The  general  rule  is  that  aany  person  may  enter  into  a  con- 
tract. 

The  exceptions  to  this  rule  are  made  with  a  view  to  pro- 
tecting those  who,  through  want  of  mental  capacity  or  judgment, 
or  through  dependence  upon  others,  are  liable  to  be  imposed 
upon.  The  persons  thus  protected  are  included  in  the  following 
classes:  2Minors,  Insane  Persons,  and  Idiots,  Persons  under 
Duress,  and  Married  Women. 

Minors.— In  this  State  sall  males  under  the  age  of  twenty- 
one  years  and  all  females  under  the  age  of  eighteen  years  are 
minors.  The  law  presumes  a  minor  to  be  lacking  in  judgment 
and  therefore  throws  its  protection  around  him.  A  minor  cannot 
give  a  delegation  of  power,  nor  *under  the  age  of  eighteen,  make 
a  contract  relating  to  "real  property,  or  relating  to  any  personal 
property  not  in  his  immediate  possession  or  control.  Such  con- 
tracts would  be  absolutely  void. 

A  minor  may  make  other  contracts  subject  to  ('his  power  of 
disaffirmance.  The  minor  may  enforce  or  not  at  his  election. 


PARTIES  TO  CONTRACTS.  37 

This  power  of  disaffirmance  is  the  personal  privilege  of  the  minor, 
or  his  representatives  in  the  case  of  his  death,  and  Tcannot  be  ex- 
ercised by  any  other  person. 

Contracts  made  by  a  minor,  whilst  he  is  under  the  age  of 
eighteen  years,  may  be  disaffirmed  either  "before  his  majority  or 
within  a  reasonable  time  thereafter.  If  the  minor  was  over  the 
age  of  eighteen  years  9he  may  likewise  disaffirm  but  will  be  re- 
quired to  restore  the  consideration  to  the  party  from  whom  it 
was  received  or  pay  its  equivalent.  What  is  a  10reasonable  time 
would  be  determined  from  the  circumstances  of  each  case. 

NECESSARIES.  There  is  one  exception  to  the  minor's  privilege 
of  disaffirmance :  "a  minor's  contract  for  necessaries  is  binding 
on  him  and  he  cannot  disaffirm  it. 

NECESSARIES  ARE  "THOSE  THINGS  WHICH  IT  Is  NECESSARY 
AND  PROPER  FOR  A  MINOR  TO  HAVE  IN  VIEW  OF  His  STATION  IN 
LIFE,  AND  THE  MANNER  IN  WHICH  HE  WAS  BROUGHT  UP. 

A  minor's  contract  for  necessaries  cannot  be  so  drawn  as  to 
prevent  an  inquiry  as  to  the  reasonableness  of  the  price,  and  he 
cannot  be  held  for  more  than  18a  reasonable  price. 

RATIFICATION.  A  minor's  contracts  may  be  ratified  "after 
he  has  reached  his  majority,  and  such  ratification  would  render 
the  contract  binding.  Such  ratification  "must  be  a  direct  and 
express  confirmation,  and,  substantially,  a  promise  to  fulfill  the 
obligation  or  to  pay  the  debt.  It  must  also  be  made  with  a 
knowledge  of  the  fact  that  it  was  discharged,  and  16with  the  in- 
tention of  renewing  it. 

LIABILITY  OF  PARENTS.  As  to  how  far  a  minor  has  power 
to  bind  his  parents  by  a  contract,  "if  the  minor  is  living 
with  his  parents,  and  the  contract  is  not  for  necessaries,  the 
authority  of  the  parents  must  be  proved.  18If  the  contract  is 
for  necessaries,  the  authority  would  be  presumed.  But,  under 
these  circumstances,  "only  such  things  as  are  necessary  to  re- 


**>  PARTIES  TO  CONTRACTS. 

lieve  the  minor  from  absolute  want,  and  which  are  not  fur. 
rushed  by  the  parents,  would  be  considered  necessaries. 

When  the  minor  is  living  away  from  his  parents  volunta. 
nly,  "the  authority  to  contract  must  be  proved  in  all  cases. 
When  the  minor  is  deserted,  or  driven  away  from  home  by  his 
parents,  "the  authority  to  contract  for  necessaries  is  continued. 

Insane  and  Idiots. — An  insane  person  is  one  whose 
intellect  has  become  deranged;  an  idiot  is  one  born  without  the 
power  of  thought. 

AN  INSANE  PERSON  "may  rescind  any  contract  which  he 
has  made  before  his  insanity  was  judiciously  determined,  by 
offering  to  return  everything  of  value  received  under  the  con- 
tract. 

After  his  insanity  has  been  judiciously  determined,  an 
insane  person  Mcan  enter  into  no  contracts. 

AN  IDIOT  24can  enter  into  no  contracts. 

A  contract  made  while  intoxicated  may  be  rescinded, 
unless  *made  for  necessaries,  or  for  goods  which  were  retained 
after  the  purchaser  became  sober. 

Married  Women. — With  regard  to  her  separate  property, 
a  married  woman  ^may  enter  into  any  contract  in  this  State, 
without  any  power  of  interference  on  the  part  of  her  husband. 
The  husband  and  wife  may  contract  with  each  other  ;n  the 
same  manner  as  if  they  were  single. 

The  community  property  is  "under  the  absolute  control 
of  the  husband;  except  that  he  cannot  give  it  away  or  convey 
it  without  a  valuable  consideration,  unless  the  wife  consent 
t'.ifret  >  in  writing.  It  is  always  advisable,  to  prevent  future 
questions  as  to  the  consideration,  that  the  wife  should  join  in 
all  conveyances  of  real  property. 

As  a^ent  for  the  husband,  the  wife  may  bind  him  '*only 
for  necessaries,  and  for  those  contracts  where  she  has  express 
or  implied  authority  to  act  for  him.  Such  authority  will  be 
implied  "on  very  slight  evidence,  as  seeing  the  wife  use  the 
goods  purchased,  without  raising  any  objection. 


PARTIES  TO  CONTRACTS.  39 

Where  the  husband  and  wife  are  living  apart,  and  the 
fault  is  with  the  wife,  "the  husband  is  not  liable,  even  for  her 
necessaries.  Where  they  are  living  apart  by  consent,  "if  the 
wife  has  other  means  of  support,  the  husband  is  not  liable  foi 
her  necessaries. 

Joint  Parties. — When  severaf  parties  are  all  bound  by 
the  same  obligation,  the  question  arises,  on  a  breach,  whether 
the  obligation  must  be  enforced  against  all  together,  or  against 
each  one  separately. 

The  obligation,  in  this  case,  is  presumed  to  be  joint,  i.  *., 
to  be  enforced  against  «//,  unless  wall,  who  are  joined,  receive 
some  benefit  from  the  consideration.  In  the  latter  case  it  is 
joint  and  several,  and  may  be  enforced  against  all  together, 
or  against  any  one  or  more  separately. 

"Where  the  contract  is  in  the  singular  number,  but  signed 
by  several,  the  obligation  is  joint  and  several.  Where  the 
obligation  is  joint,  it  is  subject  to  the  incidents  of  joint  owner- 
ship. 

"Where  a  contract  has  been  enforced  against  any  number 
less  than  all  of  the  parties  joined,  those  paying  are  entitled  to 
recover  from  each  of  those  not  paying  his  proportion  of  the 
indebtedness.  This  is  called  the  right  of  contribution.  The 
right  of  contribution  does  not  exist  "where  the  payment  is  vol- 
untary. 


QUESTIONS. 


1.  Who  may  enter  into  a  contract  ? 

2.  Who  are  excepted  ? 

MINORS. 

3.  Who  are  minors  in  this  State  ? 

4.  What  are  the  two  classes  of  minors  in  this  State  ? 

5.  What  contracts  of  minors  of  the  first  class  are  void  ? 

6.  What  is  the  force  of  other  contracts? 

7-   Does  this  right  pass  to  the  successor  in  interest  of  the  minor? 

8.  When  may  a  minor  disaffirm  ? 

9.  In  what  particular  do  minors  of  the  second  class  differ  from  those 
of  the  first  class  ? 

10.  Can  a  minor  give  a  power  of  attorney? 

1 1 .  What  exception  is  there  to  the  minor's  power  of  disaffirmance  ? 

12.  What  are  necessaries  ? 

13.  What  limit  is  there  to  the  price  which  a  minor  may  be  compelled 
to  pay  for  necessaries? 

14.  When  may  a  minor's  contracts  be  ratified  ? 

15.  What  are  the  requisites  of  such  ratification? 

16.  With  what  intention  must  it  be  made  ? 

17.  When  must  authority  to  bind  parents  be  proved  by  the  minor? 

18.  When  would  authority  be  presumed  ? 

19.  What  are  necessaries  under  these  circumstances  ? 

20.  What  is  the  rule  when  the  minor  is  living  away  from  his  parents 
voluntarily  ? 

21.  What  when  the  minor  is  deserted  or  driven  away  from  home? 

INSANE   AND    IDIOTS. 

22.  What  are  the  privileges  of  an  insane  person  before  insanity  has 
been  judicially  determined  ? 

23.  What  after  judicial  determination  ? 

24.  What  are  the  powers  of  an  idiot  ? 

25.  What  contracts  made  while  intoxicated  may  not  be  rescinded  ? 

(40) 


Q(JE\T/O>VS.  41 


MARRIED    WOMEN. 

26.  What  are  the  privileges  of  a  married  woman  with  regard  to  hei 
separate  property? 

27.  Under  whose  control  is  the  community  property  ? 

28.  To  what  extent  may  the  wife  hind  the  husband  as  his  agent  ? 

29.  How  will  authority  to  contract  be  implied  ? 

30.  Where  the  husband  and  wife  are  living  apart  and  the  fault  is  with 
the  wife,  what  are  her  privileges  ? 

31.  If  living  apart  by  consent,  whit  is  the  husband's  liability  ? 

JOINT   PARTIES. 

32..  When  is  an  obligation  resting  upon  several  presumed  ».o  be  joint 
and  several  ? 

33.  In  what  other  case  is  the  contract   presumed  to  be  joint  and  sev- 
eral ? 

34.  What  is  the  right  of  contribution  ? 

35.  When  does  the  right  of  contribution  not  exist? 


CHAPTER  II. 

TRUSTEES. 

'Definition  and  Nature. — A  TRUSTEE  Is  *ONE  IN  WHOM 
THE  LEGAL  TITLE  TO  CERTAIN  PROPERTY  Is  VESTED,  FOR 
THE  PURPOSE  OF  CARRYING  OUT  CERTAIN  OBJECTS  WITH  RE- 
GARD TO  IT. 

THE  PERSON  FOR  WHOSE  BENEFIT  A  TRUST  Is  CREATED 
Is  CALLED  THE  BENEFICIARY;  *THE  PERSON  CREATING  THE 
TRUST  Is  THE  TRUSTOR. 

Whenever  a  person  is  charged  with  the  duty  of  carrying 
out  certain  acts  for  the  benefit  of  another,  a  trust  is  created. 
Where  a  trust  is  created  the  title  to  the  property  is  in  reality 
divided  into  two  parts,  the  one  being  vested  in  the  trustee,  and 
the  other  in  the  beneficiary. 

Trust  relations,  or  'fiduciary  relations,  as  they  are  com. 
monly  called,  are  of  frequent  occurrence  in  business  transac- 
tions. 

Classes. — With  regard  to  their  creation  trusts  are  either 
'express  or  implied. 

AN  EXPRESS  TRUST  Is  "ONE  WHICH  Is  CREATED  BY  THE 
INTENTIONAL  ACT  OF  THE  PARTIES. 

AN  IMPLIED  TRUST  Is  7ONE  WHICH  Is  RAISED  BY  LAW 
FROM  THE  ACTS  OF  THE  PARTIES,  THOUGH  AN  INTENTION  TO 
CREATE  A  TRUST  DOES  NOT  APPEAR. 

Express  trusts  may  be  either-  "public  or  private.  A 
PUBLIC  TRUST  is  "one  in  which  the  beneficiary  is  some  body  or 
class  of  persons,  the  individuals  of  which  are  not  identified. 
In  private  trusts  the  beneficiary  is  clearly  identified. 

The  chief  difference  between  public  and  private  trusts  is 

(42) 


TRUSTEES.  43 


that  10the  time  during  which  the  latter  may  continue  is  limited, 
while  public  trusts  may  continue  indefinitely.  A  private  trust 
cannot  be  created  for  a  longer  period  than  "during  the  lives  of 
persons  in  existence  at  the  time  of  the  creation  of  the  trust. 
There  is  no  limit  as  to  the  number  of  lives,  provided  all  are  in 
existence  at  the  time  the  trust  is  created. 

How  CREATED.  No  particular  form  of  words  is  necessary 
in  the  creation  of  a  trust.  The  words  trust,  or  trustee,  are  not 
essential  so  that  the  intention  clearly  appears. 

Either  12real  or  personal  property  may  be  made  the  subject 
of  a  trust;  and,  where  the  subject-matter  is  personal  property, 
the  trust  may  be  created  13for  any  purpose  for  which  it  is  lawful 
to  contract.  Trusts  in  real  property  are  limited  to  certain 
specified  kinds. 

An  express  trust  in  real  property  must  be  created  14by  an 
instrument  in  writing.  An  express  trust  in  personal  property 
may  be  created  18by  any  words  or  acts  of  the  trustor  showing 
with  reasonable  certainty  the  intention  to  create  a  trust,  the 
subject-matter,  the  object  for  which  it  is  created  and  the  bene- 
ficiary. It  is  not  necessary. that  it  should  be  in  writing,  though 
it  is  generally  better  that  it  should  be  so  evidenced. 

Besides  being  created  by  the  trustor  16a  trust  must  be  ac- 
cepted by  the  trustee.  Any  words  or  acts  indicating  such  ac- 
ceptance would  be  sufficient. 

Implied  trusts.— Implied  trusts  arise  in  five  cases:  (1) 
"where  property  is  conveyed  in  trust  for  some  particular  pur- 
pose, and  that  purpose  fails,  a  trust  is  raised  in  favor  of  the 
original  trustor;  (2)  where  the  conveyance  of  property  is  to 
one  party  but  the  consideration  is  paid  in  whole  or  in  part  by 
another,  a  trust  is  raised  in  favor  of  the  person  paying  the  con- 
sideration; (3)  where  property  is  received  by  one  party  which 
properly  belongs  to  another,  a  trust  is  raised  in  favor  of  that 
other;  (4)  where  property  is  purchased  by  one  in  a  fiduciary 
position  with  trust  funds,  and  no  trust  is  declared;  and  (5)  in 
other  cases  where  justice  demands  it. 


44  TRUSTEES. 


The  right  of  the  beneficiary  in  implied  trusts  is  18to  have 
the  property  conveyed  to  him. 

Who  may  be  trustees. — A  trust  may  be  created  "l>y 
any  person,  who  has  the  title  to  the  property,  and  "any  person 
may  be  a  trustee  or  beneficiary.  But  if  the  trustee  is  unable  to 
act,  from  any  cause,  as  minority,  etc.,21the  Court  would  appoint 
another  in  his  place. 

PuWKRS  OF  TRUSTEES.  With  regard  to  the  powers  and 
dutie.s  of  trustees,  trusts  are  either  "active  or  passive.  Active 
trusts  are  ^those  in  which  the  trustee  has  some  active  duty  to 
perform  with  regard  to  the  trust;  passive  trusts  are  "those  in 
which  the  trustee  has  no  duty  to  perform  beyond  holding  the 
title  to  the  property  and  conveying  it  according  to  the  directions 
ot  the  beneficiary. 

(Venerally  the  powers  of  the  trustee  are  expressed  in  the 
nstru mem  creating  the  trust,  but  in  addition  to  these  express 
powers  he  has  ^such  implied  powers  as  are  reasonable  and 
necessary  to  carry  out  the  trust.  He  has  a  certain  limited  dis- 
cretion in  choosing  between  different  courses  the  one  likely  to 
be  most  beneficial  to  the  trust. 

In  active  trusts  the  control  of  the  trustee  over  the  trust 
property  is  limited,  by  the  duty  of  carrying  out  the  trust.  He 
may  not  deal  with  it,  except  28as  provided  for  by  the  instrument 
creating  the  trust.  If  the  property  is  conveyed  in  violation  of 
the  provisions  of  the  trust,  "the  trustee  becomes  liable  to  the 
beneficiary  for  damages.  ^A  purchaser  paying  a  valuable  con- 
sideration, and  without  notice,  express  or  implied,  of  the  viola, 
tion  of  the  trust,  would  obtain  a  good  title  to  the  property.  In 
all  other  cases  the  beneficiary  might  recover  the  property  itself, 
when  it  could  be  identified. 

The  office  of  a  trustee  is  one  of  personal  confidence  and 
"cannot  be  delegated  to  another,  whether  that  other  is  the 
regular  agent  of  the  trustee  or  not,  without  the  consent  of  the 
beneficiary.  This  does  not  prevent  the  trustee,  however,  from 
employing  an  agent  or  servant  to  do  the  work,  "provided  the 
trustee  retains  the  supervision  and  control. 


TRUSTEES. 


Where  there  are  several  trustees  they  hold  the  property  "as 
joint  owners,  and  the  right  of  survivorship  (see  page  10)  exists. 
They  must  all  join  in  signing  a  conveyance  of  the  property 
which  is  required  to  be  in  writing,  and  3>2one  may  not  leave  the 
general  control  of  the  trust  business  to  the  others. 

DUTIES  OF  TRUSTEES.  The  first  duty  of  the  trustee  is  "to 
carry  out  the  trust  in  accordance  with  the  directions. 

In  carrying  out  the  directions  of  the  trust,  the  trustee 
must  "exercise  CARE  AND  DILIGENCE,  and,  for  a  failure  to  do 
so,  he  is  liable  Mto  pay  damages,  even  though  there  is  no 
breach  of  good  faith.  He  must  exercise  diligence  in  obtaining 
the  trust  property  and  retaining  it  under  his  control.  Where 
there  are  debts  due  the  trust  estate  he  must  collect  them  with 
diligence;  and  he  must  exercise  care  in  the  protection  of  the 
trust  property  while  it  is  under  his  control. 

As  to  the  degree  of  care  and  diligence  required,  the  gen- 
eral rule  is  that  36a  trustee  must  exercise  the  same  care  and  dili- 
gence in  his  management  of  the  trust  property,  which  a  reason- 
able man  would  employ  in  the  conduct  of  his  own  private 
affairs. 

The  trustee  must  act  in  "GOOD  FAITH  with  regard  to  the 
trust  property.  Absolute  and  extreme  good  faith,  if  there  can 
be  any  degrees  in  good  faith,  is  the  very  essence  of  the  trustee's 
duty.  MHe  must  not  deal  with  the  trust  funds  to  his  own  ad- 
vantage; he  may  not  sell  anything  to  the  trust  estate,  nor  may 
he  buy  anything  from  it.  The  beneficiary  is  39entitled  to  all 
the  benefits  actually  gained  by  such  action  of  the  trustee  and 
to  hold  them  for  his  own  benefit. 

The  trustee  "must  not  mingle  the  trust  funds  with  his  own. 
If  deposited  in  a  bank  it  must  be  in  the  name  of  the  trust  es- 
tate, or  in  the  name  of  the  trustee,  as  trustee.  *!He  may  not 
borrow  the  trust  funds,  nor  may  the  trust  property  be  given  as 
security  for  a  loan  to  the  trustee  individually. 

For  any  loss  resulting  from  so  mingling  the  funds,  "the 
trustee  is  liable,  with  interest  on  the  amount.  Even  where 


40  TRUSTEES, 

there  has  been  no  loss  "the  trustee  must  prove  conclu- 
sively what  part  of  the  mingled  funds  are  his  own,  and  what  he 
cannot  prove  to  be  his  own  goes  to  the  trust,  even  though  he 
might  have  shown  that  the  trust  funds  did  not  amount  to  so 
much. 

Lastly,  under  the  head  of  good  faith,  "the  trustee  must  not 
enter  into  any  relation,  accept  any  position,  or  do  any  act  in- 
consistent with  the  interests  of  the  beneficiary;  and  he  must  in- 
form the  beneficiary  of  any  facts  which  may  come  to  his  knowl- 
edge with  regard  to  the  trust  property. 

It  is  the  trustee's  duty  ^to  RENDER  THE  PROPERTY  AS 
PRODUCTIVE  AS  POSSIBLE.  He  must  therefore  invest  the 
funds  in  some  good  securities,  and  he  is  liable  46to  pay  interest 
on  all  funds  not  so  invested.  But  the  investment  must  be  in 
good  securities,  and  not  in  speculations;  the  law  permits  a  man  to 
be  reckless  with  his  own  money,  but  not  with  that  of  other  peo- 
ple. For  any  loss  resulting  from  an  investment  of  the  trust 
funds  in  accordance  with  his  duty,  the  trustee  is  not  liable. 

Trust  funds  may  be  deposited  in  a  bank  of  good  credit 
*7for  a  reasonable  time,  but  if  they  are  allowed  to  remain  in  the 
bank  longer  than  is  necessary,  ^the  trustee  is  liable  for  any  loss 
resulting  from  a  failure  of  the  bank,  etc. 

The  trustee  *'MUST  ACCOUNT  fully  for  all  his  acts  as  trustee, 
even  though  this  may  not  be  expressed  in  the  creation  of  the 
trust,  and  he  must  keep  full  and  separate  accounts  of  his  re- 
ceipts and  disbursements  of  trust  funds,  and  must  render  state- 
ments periodically.  He  must  also  restore  the  property  re- 
maining in  the  estate  at  the  end  of  the  trust. 

RIGHTS  OF  TRUSTEES.  The  trustee  is  entitled  wto  have 
refunded  to  him  out  of  the  trust  property,  all  advances  which 
he  may  make  for  the  benefit  of  the  trust,  provided  they  were 
proper  and  reasonably  necessary.  When  they  are  not  neces- 
sary the  trustee  is  entitled  to  have  refunded  to  him  "such  ad- 
vances as  result  to  the  benefit  of  the  trust. 

As  compensation  for  his  services,  where  no  amount  is  fixed 


TRUSTEES. 


in  the  instrument  creating  the  trust,  the  trustee  is  entitled  to  a 
"'•reasonable  sum  of  money  to  be  fixed  by  the  court,  and  where  the 
trust  is  likely  to  continue  for  a  number  of  years  the  court  mav 
rinke  an  annual  allowance  to  the  trustee  as  compensation  for 
his  services. 

RIGHTS  OF  THE  BENEFICIARY.  The  beneficiary  has  no  legal 
title  to  the  property  comprising  the  trust,  but  only  ^an  equitable 
interest  therein.  He  can  exercise  no  control  over  the  trust 
property  nor  interfere  with  the  actions  of  the  trustee  except  to 
compel  the  trustee  to  carry  out  the  terms  of  the  trust. 

If  the  trustee  violates  his  trust  or  fails  in  the  performance 
of  his  duty,  the  beneficiary  wcan  go  into  court  and  compel  him  to 
dj  his  duty  or  have  him  removed  if  he  refuses.  If  the  trustee 
sells  the  trust  property,  or  puts  it  out  of  his  control  in  any  way, 
in  violation  of  his  duty,  the  beneficiary  may  recover  it  from  any 
person  chargeable  with  the  trust,  as  long  as  the  specific  property 
can  be  identified.  85Any  person  who  has  notice  of  the  fact  that 
the  conveyance  is  a  violation  of  the  trust,  or  who  does  not  pay 
a  valuable  consideration,  is  chargeable  with  the  trust.  To 
identify  the  property  66the  beneficiary  must  show  that  it  is  the 
identical  property,  or  the  fruit  or  product  thereof. 

"The  interest  of  the  beneficiary  may  be  transferred,  or  sold, 
in  the  same  manner  as  other  property,  and  no  condition  can  be 
annexed  to  the  trust  which  would  render  it  inalienable.  The 
interest  is  also  liable  for  the  debts  of  the  beneficiary,  and  may 
be  attached  by  his  creditors. 

How  EXTINGUISHED.  A  \rust  is  extinguished  Kby  the  entire 
fulfillment  of  its  object,  or  by  such  object  becoming  impossiMe, 
or  unlawful. 

A  trust  cannot  be  revoked  by  the  testator  after  its  accept- 
ance by  the  trustee  and  beneficiaries,  except  roby  the  consent  of 
all  the  beneficiaries,  unless  a  power  of  revocation  is  expressly 
reserved.  Where  so  reserved  the  power  must  be  strictly  pur- 


48  TRUSTEES. 


sued,  and  will  not  be  extended  beyond  the  expressions  of  the 
reservation. 

The  60law  will  not  allow  a  trust  to  fail  for  rawant  of  a  trustee. 
If  a  vacancy  occur  for  any  cause  the  court  will  appoint  a  trustee. 

DUTIES  OF  TRUSTEES. 

As  the  duties  of  a  trustee  are  important,  as  entering,  more 
or  less,  into  many  of  the  relations  of  life,  they  are  here  tabu- 
lated :— 

CARRY  OUT  THE  TRUST  ACCORDING  TO  DIRECTIONS. 

I.  EXERCISE  CARE  AND  DILIGENCE  in— 

1.  Obtaining  trust  property. 

2.  Collecting  debts. 

3.  Protecting  trust  property. 

II.  EXERCISE  GOOD  FAITH. 

1.  Must  not  deal  with  trust  funds  to  his  own  advantage. 

2.  Must  not  buy  from  or  sell  to  the  trust  estate. 

3.  Must  not  mingle  trust  funds  with  his  own. 

4.  Must  not  borrow  trust  funds. 

5.  Must  not  do  any  act  inconsistent  with  the  interests  of 
the  beneficiary. 

6.  Must  inform  beneficiary. 

IV.  RENDER  PROPERTY  PRODUCTIVE. 

V.  RENDER  ACCOUNTS. 

1.  Keep  separate  accounts. 

2.  Render  statements. 

3.  Turn  over  property  at  conclusion  of  trust 


QUESTIONS. 


1.  What  is  a  trustee  ? 

2.  Who  is  the  beneficiary  ? 

3.  The  trustor  ? 

4.  What  are  trust  relations  commonly  called  ? 

CLASSES. 

5.  How  are  trusts  divided  with  regard  to  their  creation  ? 

6.  What  is  an  express  trust  ? 

7.  What  is  an  implied  trust? 

8.  What  are  the  two  classes  of  express  trusts  ? 

9.  What  is  a  public  trust  ? 

10.  What  is  the  chief  difference  between  public  and  private  trusts  ? 
fi.   How  long  may  an  express  trust,  where  there  is  no  power  of  sale, 
continue? 

HOW  CREATED. 

12.  What  may  be  made  the  subject  of  a  trust? 

13.  For  what  purposes  may  a  trust  in  personal  property  be  created? 

14.  How  must  an  express  trust  in  real  property  be  created  ? 

15.  In  personal  property? 

16.  What  is  necessary  besides  the  creation  of  the  trust  by  the  trustor? 

IMPLIED  TRUSTS. 

17.  In  what  five  cases  do  implied  trusts  arise? 

18    What  is  the  right  of  the  beneficiary  in  implied  trusts? 

WHO  MAY  BE  TRUSTEES. 

19.  F>y  whom  may  a  trust  be  created? 

20.  Who  may  be  a  trustee  ? 

21.  If  the  trustee  is  incompetent  what  is  done  ? 

POWERS  OF  TRUSTEES. 

2a.  How  are  trusts  divided  with  regard  to  the  powers  and  duties  of 

trustees  ? 

(49) 

4 


00  QUESTIONS. 


23.  What  is  an  active  trust  ? 

24.  A  passive  trust  ? 

25.  What  powers  has  a  trustee,  in  addition  to  those  expressed? 

26.  How  may  the  trustee  deal  with  the  trust  property  ? 

27.  What  results  from  a  conveyance  of  the  property  in  violation  of 
the  trust  ? 

28.  Who  would  obtain  a  good  title  to  the  property  ? 

29.  Can  the  powers  of  a  trustee  be  delegated  to  another? 

30.  When  can  the  trustee  have  the  work  done  by  another  ? 

31.  How  do  several  co-trustees  hold  the  property? 

32.  May  one  trustee  leave  the  control  of  the  trust  property  to  others  ? 

DUTIES  OF  TRUSTEES. 

33.  What  is  the  first  duty  of  a  trustee  ? 

34.  What  is  the  second  ? 

35.  What  is  the  liability  for  a  failure  in  this  duty? 

36.  What  is  the  general  rule  as  to  the  degree  of  care  and  diligence? 

37.  What  is  the  third  duty  of  a  trustee  ? 

38.  May  a  trustee  have  transactions  with  the  trust  estate  ? 

39.  What  are  the  rights  of  the  beneficiary  in  this  case  ? 

40.  May  the  trustee  mingle  trust  funds  with  his  own? 

41.  May  he  borrow  trust  fu  id-  ? 

42.  What  is  the  trustees  liability  in  this  case,  where  there  has  been, 
resulting  loss  ? 

43.  Where  there  has  been  no  loss  ? 

44.  What  is  the  last  duty,  under  the  head  of  good  faith  * 

45.  What  is  the  fourth  duty  of  a  trustee  ? 

46.  What  is  his  liability  on  uninvested  funds? 

47  For  how  long   may  trust  funds  be  deposited  in  a  bank  of  good 
credit  ? 

48.  What  is  the  liability  of  the  trustee  if  they  remain  longer? 

49.  What  is  the  fifth  duty  of  the  trustee  ? 

RIGHTS   OF   TRUSTEES. 

50.  What  is  the  right  of  the  trustee,  witn  regard  to  advances  ? 

51.  What  unnecessary  advances  must  be  refunded  ? 

52.  What  compensation  is  the  trustee  entitled  to  ? 

RIGHTS  OF   BENEFICIARY. 

53.  What  is  the  right  of  the  beneficiary  ? 

54.  What  is  the  remedy  of  the  beneficiary  when  the  trustee  violate* 
Ms  duty? 


QUESTIONS.  61 


55.  Who  is  chargeable  with  the  trust  ? 

56.  What  is  necessary  to  identify  the  property? 

57.  May  the  interest  of  the  beneficiary  be  transferred  ? 


HOW   EXTINGUISHED. 


58.  How  is  a  trust  extinguished  ? 

59.  How  may  a  trust  be  revoked  after  acceptance? 

60.  What  happens  on  the  death  of  a  trustee? 

61.  Of  a  co-trustee  ? 


CHAPTER  III, 

AGENTS. 

Definition  and  Nature. — AGENCY  Is  *A  CONTRACT  BY 
WHICH  ONE  PERSON,  WITH  GREATER  OR  LESS  DISCRETIONARY 
POWERS,  UNDERTAKES  TO  REPRESENT  ANOTHER  IN  CERTAIN 
BUSINESS  RELATIONS. 

The  person  so  represented  is  called  2the  principal;  the 
person  representing  him  is  called  sthe  agent. 

*Any  person  who  may  do  an  act  in  his  own  right  may 
delegate  authority  to  another  to  do  that  act  for  him,  but  a  mi- 
nor cannot  appoint  an  agent.  An  agent  cannot  sign  an  ac- 
knowledgment to  take  a  case  out  of  the  Statute  of  Limitations. 

How  Created. — Authority  may  be  conferred  upon  an 
agent0  bv  express  words,  or  it  may  be  implied  from  the  acts 
of  the  principal.  Where  the  authority  is  express  it  may  be 
conferred  either  in  writing  or  orally.  Generally  "where  the 
agent  is  to  bind  the  principal  by  an  instrument  in  writing,  the 
appointment  must  be  in  writing.  In  order  to  complete  the 
contract  of  agency,  7the  appointment  must  be  accepted  by  the 
agent. 

The  authority  of  an  agent  may  be  implied  "from  any  acts 
of  the  principal  which  would  lead  persons  acting  with  the 
agent  to  believe  that  such  authority  existed.  Thus  we  have 
seen  [p.  38]  that  the  wife  sometimes  has  an  implied  authority 
to  act  as  the  agent  of  her  husband.  Authority  is  implied 
'from  the  general  custom  in  the  special  branch  of  business  in 
which  the  agent  is  employed,  or  from  a  prior  course  of  dealing 
between  the  parties. 


AGENTS.  53 

The  express  authority  of  an  agent  is  generally  enlarged 
by  "such  implied  powers  as  are  necessary  to  carry  out  the  bus- 
iness for  which  the  agency  is  created. 

A  contract  made  by  an  agent  who  had  no  authority  at  the 
time  of  contracting  may  be  made  binding  uby  ratification  by 
the  principal.  But  in  order  that  a  ratification  shall  be  effect- 
ual, "the  principal  must  be  cognizant  of  all  the  facts.  A  rati- 
fication need  not  be  by  express  words;  13an  acceptance  of  the 
fruits  of  the  contract  would  generally  be  considered  a  ratifica- 
tion. 

WHO  MAY  BE.  "Any  person  able  to  contract  for  himself 
may  be  an  agent;  a  person  not  able  to  act  for  himself  may  be 
an  agent  for  another  15where  he  has  sufficient  understanding  to 
obey  instructions. 

POWERS  OF  AGENTS.  To  a  contract  entered  into  by  an 
agent  there  are  three  parties :  the  principal,  the  agent,  and  the 
third  party.  The  powers  of  the  agent  would  therefore  be  di- 
vided into  two  classes, — 16the  power  to  bind  the  principal  and 
the  power  to  bind  the  third  party. 

To  BIND  THE  PRINCIPAL.  "Any  act  done  by  an  agent, 
within  the  scope  of  his  express  or  implied  power,  binds  the 
principal  in  the  same  manner  as  if  the  act  had  been  done  by 
the  principal  himself.  Whether  or  not  an  act  is  within  the 
scope  of  the  agent's  authority  is  to  be  determined  from  each 
case. 

Representations,  made  by  the  agent  "when  among  the  in- 
ducements to  the  contract,  and  made  in  the  course  of  his  em- 
ployment, would  bind  the  principal.  But  if  these  representa- 
tions are  "made  before  the  employment  has  commenced,  or 
after  it  has  ended,  they  would  not  be  binding. 

"Notice  to  an  agent  of  any  fact  in  respect  to  a  matter  con- 
cerning which  he  is  authorized  to  treat;  or  "payment  to  an 
agent  authorized  to  receive  it  is  as  binding  as  if  to  the  principal. 

Payment  to  an  agent  not  authorized  to  receive  it  "is  of  no 
effect,  and  does  not  discharge  the  obligation. 


64  AGENTS. 

Besides  being  bound  by  the  contracts  of  the  agent,  the 
principal  is  rendered  liable  for  ^wrongs  committed  by  the 
agent,  while  he  is  acting  within  the  scope  of  his  authority.  If 
the  agent  goes  outside  of  his  authority  the  principal  is  not  bound. 

It  sometimes  happens  that  an  agent  enters  into  a  contract 
without  disclosing  the  fact  that  he  is  acting  as  agent,  or  with- 
out disclosing  the  name  of  his  principal;  in  such  case  "the 
principal  isbound  in  the  same  manner  as  if  disclosed,  if  found 
before  the  time  of  performance  has  passed. 

To  BIND  THIRD  PARTY.  Where  the  agent  has  acted  for 
and  in  the  name  of  the  principal,  the  third  party  is  liable  Mto 
the  principal  alone,  and  to  the  same  extent  as  if  he  had  con- 
tracted with  him  personally. 

"Where  the  contract  is  in  the  name  of  the  agent  himself 
not  as  agent  but  is  within  the  scope  of  his  authority  as  agent, 
the  principal  may  enforce  it;  but  the  third  party  may  enjoy 
the  same  rights  against  the  principal  which  he  might  have 
exercised  against  the  agent.  Where  the  agent  exceeded  his 
authority,  "the  principal  cannot  enforce  the  contract. 

Where  the  fact  of  agency  is  disclosed,  though  the  name 
of  the  principal  may  not  be,  Many  claims  against  the  agent  can- 
not be  set  off  against  the  principal. 

Duties  of  Agent. — To  THE  PRINCIPAL.  The  relation  of 
agency  being  a  fiduciary  one,  the  duties  of  an  agent  are  "the 
vuue  as  those  of  a  trustee. 

When  an  agent's  instructions  are  ambiguous,  he  may  act 
**on  any  probable  construction  which  he  adopts  in  good  faith. 
And  where  the  instructions  become  impracticable,  "the  agent 
need  not  follow  them. 

To  THE  THIRD  PARTY.  Where  the  agent  acts  as  agent 
and  for  a  known  principal,  whe  incurs  no  liability  to  third  par- 
ties. 

Where  the  name  of  the  principal  is  not  disclosed  it  be- 
comes a  question  of  evidence  as  to  whom  the  credit  is  given, 
and  the  "person  to  whom  credit  is  given  is  bound  by  the  con- 


AGENTS.  55. 


tract.  Of  course  where  the  principal  and  also  the  fact  of  the 
agency  are  both  undisclosed,  the  credit  is  given  to  the  agent, 
and  he  alone  is  bound  by  the  contract.  But  if  the  principal  is 
afterwards  discovered,  the  person  so  dealing  has  his  election  to 
hold  either  the  agent  or  the  principal. 

'  Where  the  agent  does  any  acts  outside  of  the  scope  of  his 
authority,  express  or  implied,  84he  is  liable  to  the  third  party. 
And  for  all  wrongs  done  by  him  8Bhe  is  responsible,  either  jointly 
with  the  principal  or  separately. 

An  agent  doing  an  illegal  act,  cannot  defend  himself  on 
the  ground  that  it  was  done  as  agent,  for  an  agreement  to  do 
anything  unlawful  is  void.  36For  his  own  fraud  the  agent  is  also 
personally  responsible. 

Rights  of  Agents. — AGAINST  THE  PRINCIPAL.  As  against 
the  principal  the  agent  is  entitled  to  "compensation  or  com- 
mission for  the  work  performed,  but  ^the  transaction  must  have 
been  completed  before  the  commissions  are  earned,  and  an  agent 
stopping  the  work  before  completion  ^is  not  entitled  to  any  com- 
missions. 

When  the  commissions  are  not  fixed  by  the  terms  of  the 
agreement,  they  may  be  40by  the  custom  or  usage  in  that  business, 
or  the  agent  might  recover  a  reasonable  amount.  But  it  is 
necessary  that  "the  express  or  implied  employment  of  the  agent 
should  be  proved,  before  a  liability  for  commissions  would  arise ; 
voluntary  services  would  not  raise  such  a  liability. 

An  agent  is  also  "entitled  to  reimbursement  for  his  out- 
lays, and  where  he  has  made  advances  he  is  entitled  to  interest 
thereon. 

The  principal  or  employer  48is  not  liable  to  his  agent  or 
servant  for  injuries  in  consequence  of  the  ordinary  risks  of  the 
business  in  which  he  is  employed,  nor  in  consequence  "of  the 
negligence  of  another  person  employed  by  the  same  employer 
in  the  same  general  business,  unless  the  negligence  causing  the 
injury  was  caused  in  the  performance  of  a  duty  the  employer 


56  AGENTS. 


owes  b^  law  to  the  employee,  or  unless  the  employer  has  neglected 
to  use  ordinary  care  in  the  selection  of  the  culpable  employee. 
The  principal  or  employer  shall,  however,  be  responsible  for 
injuries  caused  by  the  negligence  of  officers,  foremen,  superior 
employee  or  a  co-employee  engaged  in  another  department  of 
work,  or  for  furnishing  unsafe,  insufficient  or  defective  material 
or  machinery, 

Any  contract  or  agreement  between  employer  and  employee 
whereby  the  employee  waives  the  benefits  of  the  above  paragraph 
are  null  and  void.  Contributory  negligence  on  the  part  of  the 
employee  will  avoid  a  recovery  for  damages,  except  such  as  are 
the  result  of  willful  negligence  of  the  employer. 

AGAINST  THIRD  PARTY.  Where  the  contract  is  in  the 
name  of  the  principal  the  agent  has  no  right  under  it.  Where 
the  contract  is  in  the  name  of  the  agent,  even  though  the  fact 
of  the  agency  is  disclosed,  45the  agent  may  enforce  it  to  the  same 
extent  as  the  principal. 

How  Ended. — A  contract  of  agency  may  be  dissolved  by 
mutual  consent,  or  <6by  revocation  of  the  principal.  Insanity,  or 
death  of  the  principal  "will  also  immediately  put  an  end  to  the 
agency.  Where  the  agency  is  revoked  by  the  principal  without 
cause,  "the  agent  is  entitled  to  the  same  compensation  which  he 
would  have  received  if  the  agreement  had  been  carried  out. 

The  agency  may  also  be  ended  by  49the  renunciation,  in- 
capacity or  death  of  the  agent. 


QUESTIONS. 


1.  What  is  agency? 

2.  What  is  the  person  represented  called? 

3.  The  person  representing  him  ? 

4.  Who  may  be  a  principal? 

HOW  CREATED. 

5.  How  may  an  agency  be  created  ? 

6.  What  is  the  general  rule  as  to  the  written  authority  of  an  agent } 

7.  What  is  necessary  to  complete  the  contract  of  agency  besides  the 
appointment  ? 

8.  From  what  may  the  authority  of  an  agent  be  implied  ? 

9.  From  what  particular  circumstances  is  authority  implied  ? 

10.  What  implied  powers  has  an  agent  in  addition  to  those  expressly 
given? 

11.  How  may  an  unauthorized  contract  of  an  agent  be  made  binding  ? 

12.  What  is  necessary  that  a  ratification  should  be  effectual? 

13.  From  what  acts  would  a  ratification  be  implied? 

WHO  MAY  BE. 

14.  Who  may  be  an  agent  ? 

15.  When  may  a  person  not  able  to  contract  for  himself  be  an  agent? 

POWERS  OF  AGENTS. 

1 6.  What  are  the  two  classes  of  powers  of  agents? 

1 7.  What  bind  the  principal  ? 

1 8.  When  do  the  representations  of  an  agent  bind  the  principal? 

19.  What  representations  do  not  bind  the  principal  ? 

20.  What  is  the  effect  of  notice  to  the  agent? 

21.  Of  payment  to  an  agent? 

22.  What  is  the  effect  of  payment  to  an  agent  not  authorized  to  re- 
ceive it  ? 

23.  For  what  wrongs  of  the  agent  is  the  principal  liable  ? 

24.  What  is  the  effect  of  the  discovery  of  an  undisclosed  principal? 


•  i  QUESTIONS. 

'$  25.  To  whom  is  the  third  party  liable  when  the  agent  has  acted  for 
and  in  the  name  of  the  principal  ? 

26.  When  may  Che  third  party  set  off  claims  against  the  agent? 

27.  Where  the  agent  exceeded  his  authority  what  are  the  rights  of  the 
principal  ? 

28.  Where  the  fact  of  the  agency  is  disclosed,  but  not  the  name  of 
the  principal,  what  are  the  rights  of  the  third  party  ? 

DUTIES  OF  AGENTS. 

29.  What  are  the  duties  of  an  agent  to  the  principal  ? 

30.  When  instructions  are  ambiguous,  how  may  an  agent  act? 

31.  Where  the  instructions  become  impracticable,  what  may  the  agent 
do? 

32.  Where  the  agent  acts  as  agent  and   for  a  known   principal,  what 
ishi.s  ii  Ability  to  the  third  party? 

33.  Who  is  bound  when  the  name  of  the  principal  is  not  disclosed? 

34.  What  is  the  agent's  liability  when  he  exceeds  his  authority  ? 

35.  What  is  his  liability  for  wrongs  done  by  him  ? 

36.  Is  an  agent  responsible  for  his  own  illegal  and  fraudulent  acts  ? 

RIGHTS  OF  AGENTS. 

37.  What  are  the  agent's  rights  against  the  principal  ? 

38.  What  is  necessary  before  commissions  are  earned  ? 

39.  What  are  the  rights  of  an  agent  who  voluntarily  fails  to  finish  the 
•work? 

40.  When  the  commissions  are  not  fixed  by  agreement,  how  would 
they  be  determined  ? 

41.  Whai  is  necessary  before  a  liability  for  commissions  would  be 
.raised  ? 

42.  What  is  an  agent's  right  as  to  advances? 

43.  What  is  the  principal's  liability  for  injuries  caused  by  the  negli- 
gence of  a  felloA-  sjrvant  ? 

44.  lor  \\  hat  negligence  of  the  principal  does  a  liability  exist  ? 

45.  What  rights  has  an  agent  where  the  contract  is  in  his  own  name? 

46.  By  what  acts  of  the  principal  may  the  agency  be  dissolved  ? 

47.  What  is  the  effect  of  the  insanity  or  death  of  the  principal? 

48.  What  are  the  rights  of  the  agent  where  the  agency  is  revoked 
•without  cause  ? 

49.  What  acts  on  the  part  of  the  agent  will  end  the  agency  ? 


CHAPTER  IV. 

PARTNERS. 

Definition  and  Nature. — A  PARTNERSHIP  Is  *AN 
AGREEMENT  WHEREBY  Two  OR  MORE  PERSONS  AGREE  TO 
COMBINE  THEIR  CAPITAL  AND  LABOR,  OR  EITHER  OF  THEM, 
IN  THE  TRANSACTION  OF  SOME  BUSINESS  FOR  THEIR  COMMON 
PROFIT. 

A  partnership  is  also  called  a  firm,  or  a  co-partnership. 
The  persons  entering  into  the  agreement  are  called  partners. 

The  essential  feature  of  a  partnership  is  2the  sharing  of 
profits.  A  joint  purchase  of  goods  to  be  divided  would  simply 
create  a  joint  ownership.  The  sharing  in  profits  must  also  be 
*as  principals;  an  agent  or  employee  of  any  kind  would  not  be- 
come a  partner  by  merely  receiving  as  compensation  a  certain 
proportion  of  the  profits. 

The  rights,  duties  and  liabilities  arising  out  of  a  partner- 
ship are  governed  4by  the  principles  of  joint  ownership  and  of 
agency;  as  to  the  firm  property  they  are  joint  owners;  as  to 
transactions  with  third  parties  they  are  agents  for  each  other. 

How  CREATED.  A  partnership  is  created  5by  an  agree- 
ment, written  or  oral,  entered  into  by  all  the  parties.  It  is 
necessary  that  all  the  partners  should  enter  into  the  agree- 
ment, for  the  relation  is  one  so  extremely  confidential  that 
unanimous  consent  is  required.  When  the  agreement  is  in 
writing  it  is  called  6the  articles  of  co-partnership. 

£ny  name  may  be  adopted  as  the  firm  name;  it  may  con- 
sist of  the  names  of  all  of  the  parties,  or  any  number  of  them, 
or  of  none  of  them.  When  the  firm  name  does  not  show  the 
names  of  all  of  the  individual  partners,  7a  certificate  must  be 
filed  with  the  county  clerk,  showing  the  names  in  full  of  all 

(59) 


60  PARTNERS. 


the  members  of  the  firm,  with  their  place  of  residence.  The 
certificate  must  also  be  published  once  a  week  for  four  succes- 
sive weeks,  in  some  newspaper  published  in  the  county.  This 
certificate  must  be  signed  by  all  the  partners  and  acknowl- 
edged before  a  notary  public. 

*Any  person  capable  of  entering  into  any  other  contract 
may  enter  into  the  contract  of  partnership. 

Any  person  who  9allows  himself  to  be  held  out  to  the 
world  as  a  partner  is  held  liable  as  such,  even  though  he  may 
not  share  in  the  profits  or  have  any  interest  in  the  partnership 
property. 

Powers  of  Partners. — Each  partner  Mis  agent  for  the 
others  in  the  transaction  of  all  partnership  business,  and  has 
all  the  necessary  and  usual  authority  as  such.  "Any  agreement 
of  the  partners  among  themselves  would  be  ineffectual  to 
change  or  limit  this  authority,  except  as  to  parties  to  whom 
such  agreement  was  actually  communicated. 

The  transactions  of  a  partner  must  be  12within  the  scope 
of  the  business  to  carry  on  which  the  partnership  was  created, 
or  the  others  will  not  be  bound.  Where  any  partner  acts  in 
bad  faith  the  others  are  not  bound,  unless  "the  third  party 
acted  in  good  faith  and  paid  a  valuable  consideration. 

14In  most  transactions  which  are  in  writing,  as  in  note, 
etc.,  the  firm  name  may  be  signed  by  any  one  of  the  partners, 
and  all  of  the  others  are  bound;  but  15where  real  property  be- 
longing to  the  firm  is  to  be  conveyed,  the  conveyance  should 
be  signed  by  all  of  the  partners  individually. 

All  of  the  partners  may  abandon  the  control  of  the  busi- 
ness to  one  of  their  number,  when  he  has  authority  to  do  any 
act  connected  with  the  partnership  business.  In  the  absence 
of  any  such  agreement,  no  partner  may  do  any  of  I6the  follow- 
ing acts,  without  the  consent  of  the  others: — 

1.  Make  an  assignment  of  partnership  property   for  the 
benefit  of  creditors. 

2.  Dispose  of  the  good-will  of  the  business. 


P.4KTNERS. 


3.  Dispose  of  the  whole  of  the  partnership  property  at  once, 
unless  it  consists  entirely  of  merchandise. 

4.  Do  any  act  which  would  make  it  impossible  to  carry  on 
the  partnership  business. 

5.  Confess  a  judgment,  or  submit  a  claim  to  arbitration. 

6.  Make  any  change  in  the  nature  of  the  business  carried 
on  by  the  firm. 

Duties. —  To  EACH  OTHER.  Partnership  is  one  of  the 
most  strictly  confidential  of  all  business  relations,  and  the  duties 
of  partners  to  each  other  are  "the  same  as  those  of  trustees  to 
the  beneficiary.  Good  faith  in  the  transaction  of  all  firm  busi- 
ness is  the  foundation  of  their  mutual  relations. 

Partners  may  engage  in  a  separate  business  18where  that 
business  does  not  compete  in  any  way  with  the  partnership  busi- 
ness; but  if  any  business  is  entered  into  similar  to  that  of  the 
firm,  19the  other  partners  are  entitled  to  share  in  the  profits. 

To  THIRD  PERSONS.  Each  partner  is  liable  to  third  persons 
for  all  the  debts  20and  obligations  of  the  partnership,  jointly  with 
his  partners.  Partnership  debts  must  first  be  paid  out  of  the 
partnership  property  before  any  of  it  is  available  to  pay  the  in- 
dividual debts  of  a  partner.  The  ^individual  property  of  a  part- 
ner must  be  exhausted  before  resort  can  be  had  to  his  interest 
in  the  partnership  property.  Where  the  individual  property  of  a 
partner  is  taken  for  partnership  indebtedness  such  partner  22can 
claim  reimbursement  from  the  partnership  property  or  contri- 
bution from  the  other  partners. 

The  liability  for  debts  contracted  during  the  continuance 
of  the  partnership  or  before  ^notice  of  its  dissolution,  does  not 
cease  on  its  dissolution;  but  for  any  debts  contracted  after  notice 
of  the  withdrawal  of  any  partner,  that  partner  is  not  liable. 

Rights  of  Partners. —  Partnership  being  the  result  of  a 
contract,  the  mutual  rights  of  the  parties  are  governed  primarily 
"by  the  terms  of  the  agreement,  but  in  addition  to  the  express 
stipulations  the  law  declares  certain  rights  and  obligations  which 
rest  upon  all  partners  as  such. 


«2  PARTNERS. 


The  partnership  property  is  held  ^by  all  of  the  partners  as 
joint  owners;  each  partner  having  an  undivided  interest  in  all 
of  the  property.  The  partnership  property  includes  26all  that 
was  contributed  to  the  capital  stock  of  the  partnership  at  the 
time  of  its  formation,  and  all  subsequent  additions  and  ac- 
cumulations. It  may  consist  "of  real  or  personal  property,  or 
both. 

The  share  of  each  partner  in  the  partnership  property  is 
"the  proportion  of  existing  assets  to  which  he  would  be  en- 
titled if  the  whole  property  were  converted  into  money  and  the 
firm  debts  were  paid.  In  order  that  a  partner  should  obtain 
his  share  it  is  necessary  that  there  should  be  a  liquidation. 

The  profits  of  the  business,  2fin  the  absence  of  any  agree- 
ment to  the  contrary,  are  equally  divided  among  the  partners, 
and  beyond  this  no  partner  is  entitled  to  any  compensation. 
But  ""advances  by  a  partner  from  his  private  funds,  and  extraor- 
dinary expenses  in  the  partnership  business,  as  in  protecting 
the  stock  from  fire,  are  to  be  repaid  to  him. 

.  Unless  there  is  an  express  agreement  to  the  contrary,  "a 
majority  of  the  partners  control  in  the  conduct  of  its  business, 
but  8athey  are  limited  to  the  general  scope  of  the  partnership 
business,  and  they  must  consider  the  best  interests  of  the  firm 
in  their  decisions.  A  majority  of  the  partners,  however,  Mmay 
not  expel  a  m  ember  of  the  firm  without  his  consent. 

For  any  breach  of  his  agreement,  or  any  act  not  in  ac- 
cordance with  his  duty,  a  partner  is  3*liable  to  the  others  for 
damages. 

''The  share  of  a  partner  in  the  partnership  property  is  lia- 
ble to  attachment  by  his  individual  creditors.  But  in  case  of 
such  attachment  an  accounting  must  be  had,  and  the  attach- 
ment creditor  gets  the  liquidated  share  of  the  partner. 

How  Dissolved. — Where  the  partnership  is  limited  by 
the  terms  of  the  agreement  to  continue  for  a  certain  time,  it  is 
dissolved  by  the  expiration  of  that  time,  and  may  not  be  dis 
solved  before  except  *by  mutual  consent  or  a  decree  of  dissolu- 
tion by  a  Court 


PARTNERS.  61 


Should  any  partner  withdraw  before  the  time  fixed,  87he 
becomes  liable  to  the  others  for  resulting  damages,  unless  he 
would  have  been  entitled  to  a  decree  of  dissolution.  A  decree 
of  dissolution  will  be  granted  "when  any  of  the  partners  be- 
come legally  -incapacitated,  when  one  is  guilty  of  a  breach  of 
his  duty  as  a  partner,  or  when  the  business  can  be  carried  on 
only  at  a  permanent  loss.  The  withdrawal  of  a  partner  3>\vorks 
a  dissolution  per  se. 

If  no  time  for  its  continuance  is  fixed  by  agreement,  a 
partnership  may  be  dissolved  "at  any  time  by  any  of  the  part- 
ners. 

When  one  partner  sells  his  interest  to  another  person, 
41the  firm  is  thereby  dissolved.  If  the  other  partners  agree  to 
accept  the  new  member  *2a  new  firm  is  thereby  created;  if  they 
refuse  to  accept  him  an  accounting  must  be  had.  The  death 
of  any  partner  would  also  *3work  a  dissolution,  and  his  legal 
representatives  would  be  entitled  to  an  accounting. 

Where  a  dissolution  of  a  partnership  has  been  ordered  or 
an  accounting  is  to  be  had,  *4the  authority  of  the  partners  is 
limited  to  those  acts  which  may  be  necessary  for  such  dissolu- 
tion or  accounting,  and  therefore  they  may  collect  the  debts, 
or  sell  the  pro}  erty  of  the  concern,  but  they  may  not  create 
any  new  indebtedness. 

Special  Partners.— SPECIAL  PARTNERS  ARE  ^THOSE 
WHOSE  LIABILITY  FOR  FIRM  DEBTS  Is  LIMITED  TO  THE 
AMOUNT  SUBSCRIBED  BY  THEM  TO  THE  CAPITAL  STOCK  OP 
THE  PARTNERSHIP. 

Special  partnerships  may  be  created  to  carry  on  any  busi- 
ness except  *6insurance  or  banking;  and  may  consist  of  both 
general  and  special  partners. 

How  Created. — A  special  partnership  is  created  by 
agreement  in  the  same  manner  as  a  general  partnership,  but  in 
order  to  limit  the  liability  of  the  special  partners  as  to  third 
persons,  there  are  certain  provisions  which  must  be  strictly 
complied  with. 


PARTNERS. 

"Certificates  in  duplicate  must  be  prepared,  acknowledged 
by  each  of  the  partners,  and  filed  with  the  county  clerk  and 
the  recorder.  These  certificates  must  set  forth  "the  firm  name, 
the  nature  of  the  business,  names  and  residences  of  the  partners, 
specifying  those  who  are  general  and  those  who  are  special, 
the  subscriptions  of  each  special  partner,  and  the  time  during 
which  the  partnership  is  to  continue.  To  each  certificate  must 
be  attached  "affidavits  by  each  partner,  stating  that  the  sum 
specified  has  been  actually  subscribed  by  him  in  good  faith. 

This  certificate,  or  the  substance  of  it,  must  be  published 
at  least  5"once  a  week  for  four  successive  weeks  in  a  newspaper 
published  in  the  county. 

Powers. — A  special  partner  "may  investigate  the  affairs 
of  the  partnership  at  any  time,  and  may  advise,  but  the  general 
partners  only  have  authority  to  transact  the  business  of  the 
firm. 

A  special  partner  may  lend  or  advance  money  to  the  part- 
nership, and  as  to  such  advances  he  has  82the  same  position  as 
other  creditors  of  the  firm;  but  in  case  of  insolvency  53all  other 
claims  of  special  partners  against  the  firm  must  be  postponed 
until  after  the  other  creditors  are  satisfied. 

A  special  partner  may  not  withdraw  any  part  of  his  capi- 
tal from  the  firm  during  the  continuance  of  the  partnership, 
and  if  he  does  so  "he  immediately  becomes  liable  as  a  general 
partner. 

A  special  partner  may  receive  "interest  on  his  capital  and 
may  share  in  the  profits  of  the  concern,  and  he  is  not  bound 
to  refund  any  profits  which  he  may  have  received  to  meet  sub- 
sequent losses. 

66Any  failure  to  comply  with  the  requirements  as  to  form- 
ing a  special  partnership,  any  fraud  or  willful  misstatements  in 
the  certificate,  or  any  violation  of  his  duty  as  such,  renders  a 
special  partner  liable  as  a  general  partner.  Any  change  in  the 
membership  of  the  firm  renders  a  new  certificate,  etc.,  neces- 
sary, or  all  of  the  partners  become  general. 


PARTNERS. 


MA  certificate  of  the  dissolution  of  a  special  partnership 
by  consent  of  the  parties  must  be  filed  and  published  in  the 
same  manner  as  the  original  certificate  of  special  partnership 


QUESTIONS. 

1.  What  is  partnership  ? 

2.  What  is  the  essential  feature  of  a  partnership  ? 

3.  How  must  the  profits  be  shared  ? 

4.  By  what  principles  are  these   rights,  duties,  etc.,  of  partnership 
governed  ? 

HOW  CREATED. 

5.  How  is  a  partnership  created  ? 

6.  What  is  the  agreement  called  when  in  writing? 

7.  When  the  firm  name  does  not  show  the  names  of  all  the  partners, 
what  must  be  done? 

8.  Who  may  be  partners  ? 

9.  When  is  a  person,  not  actually  a  partner,  liable  as  such  ? 

POWERS  OF  PARTNERS. 

10.  What  relation  does  each  partner  bear  to  the  others  in  the  tf  ant- 
action  of  partnership  business  ? 

11.  Can  the  partners  change  this  by  agreement? 

12.  Within  what  limits  must  the  partner  act? 

13.  Under  what  circumstances  are  the  partners  bound  when  one  acts 
in  bad  faith  ? 

14.  When  may  the  firm  name  be  signed  ? 

15.  When  must  the  individual  names  be  signed? 

1 6.  What  acts  may  a  partner  not  do  without  the  consent  of  the  others  ? 

DUTIES  OF  PARTNERS. 

17.  What  are  the  duties  of  partners  to  each  other? 

1 8.  When  may  partners  engage  in  a  separate  business  ? 

19.  If  the  business  competes  with  the  partnership  business,  what  arc 
the  rights  of  the  other  partners? 

20.  To  what  extent  is  each  partner  liable  for  the  firm  indebtedness  ? 

21.  In  what  case  may  the  private  fortune  not  be  attached  before  the 
firm  property? 

22.  When  the  private   property  of  a  partner  is  taken    what  are    his 
rights  ? 

23.  When  does  the  liability  of  a  partner  cease  ? 

(66) 


QUESTIONS.  67 


RIGHTS  OF  PARTNERS. 

24.  By  what  are  the  mutual  rights  of  the  partners  governed  primarily  ? 

25.  How  is  the  firm  property  held  ? 

26.  What  does  the  partnership  property  include  ? 

27.  Of  what  may  it  consist  ? 

28  What  is  the  share  of  each  partner  ? 

29.  How  are  the  profits  divided  ? 

30.  What  may  a  partner  have  repaid  to  him  ? 

31.  Who  control  in  the  conduct  of  business? 

32.  What  limit  is  there  on  their  actions  ? 

33.  What  is  beyond  the  power  of  a  majority  ? 

34  What  is  the  liability  of  a  partner  for  breach  of  duty  ? 

35.  Can  the  share  of  a  partner  be  reached  by  his  creditors  ? 

DISSOLUTION. 

36.  How  may  a  partnership  be  dissolved  before  the  time  set  for  dis- 
solution ? 

37.  What  is  the  liability  of  a  partner  withdrawing  ? 

38.  When  will  a  decree  of  dissolution  be  granted  ? 

39.  What  is  the  effect  of  the  withdrawal  of  a  partnei  ? 

40  If  no  time  is  fixed  how  may  a  partnership  be  dissolved? 

41.  What  is  the  effect  of  a  sale  by  a  partner  of  his  interest  ? 

42.  What  results  from  the  acceptance  of  the  new  partner  ? 

43.  What  is  the  effect  of  the  death  of  a  partner  ? 

44.  What  is  the  authority  of  partners  where  a  dissolution  has  been 
ordered? 

SPECIAL  PARTNERS. 

45.  Who  are  special  partners? 

46.  What  business  may  not  be  carried  on  by  a  special  partnership  ? 

47.  What  is  the  first  step  in  creating  a  special  partnership  ? 

48.  What  must  be  contained  in  such  certificates  ? 

49.  What  must  be  attached  to  each  certificate  ? 

50.  How  often  must  the  certificate  be  published  ? 

51.  What  powers  have  special  partners  ? 

52.  What  position  does  a  special  partner  hold  as  to  advances  by  him 
to  the  firm  ? 

53.  What  rights  have  they  in  case  of  insolvency  ? 

54.  What  is  the  result  of  withdrawing  capital  from  the  firm  ? 

55.  What  may  a  special  partner  receive  ? 

56.  What  renders  a  special  partner  liable  as  a  general  one  ? 

57.  In  case  of  the  dissolution  of  a  special  partnership,  what  is  aeces- 
.ary? 


CHAPTER  V. 

CORPORATIONS. 

De^nition  and  Nature. — A  CORPORATION  Is  *AN  AR- 
TIFICIAL BEING  CREATED  WHOLLY  BY  LAW,  FOR  THE  PURPOSE 
OF  CARRYING  OUT  CERTAIN  OBJECTS  EXPRESSED  IN  ITS 
CREATION. 

A  corporation  exists  in  legal  contemplation  "entirely  sepa- 
rated from  the  individuals  which  compose  it;  the  members  in- 
dividually are  lost  in  the  corporate  existence. 

A  corporation  differs  from  a  partnership  in  many  particu- 
lars; 8a  partnership  is  merely  the  individuals  of  which  it  is 
composed,  and,  while  for  convenience  a  firm  name  is  used  to 
represent  all  of  the  partners,  the  law  considers  them  merely  as 
individuals  acting  collectively;  a  corporation  has  a  separate  ex- 
istence and  being  created  by  law  to  continue  for  a  specified 
time  exists  for  that  period  without  reference  to  any  changes  in 
the  individuals  composing  it. 

In  certain  respects  and  for  certain  purposes  corporations 
are  considered  as  persons,  and  are  governed  by  the  laws  apply- 
ing to  persons. 

The  general  rule  is  that  Corporations  are  entitled  to  the 
rights  conferred  upon  persons  if  they  fall  within  the  general 
reason  or  design  of  the  act  conferring  the  right  upon  persons. 

Corporations  are  created  5in  order  to  gain  the  united  aid 
of  many  persons  for  the  successful  promotion  of  some  design 
for  the  public  good.  6On  account  of  their  continued  existence 
in  spite  of  changes  in  membership,  and  of  the  superior  secu- 
rity of  members  of  a  corporation  to  partners,  as  will  be  seen 
later,  corporations  are  much  favored. 

(68) 


CORPORA  TIONS, 


How  Created.  —  7A  corporation  cannot  be  created  by 
act  of  the  parties  alone,  some  action  by  the  Legislature  is  neces- 
sary in  order  to  bring  it  into  existence.  In  this  State  a  private 
corporation  may  not  be  formed  by  special  act  of  the  Legislature, 
but  the  code  provides  means  for  8any  body  of  persons  not  less 
than  three,  a  majority  of  which  must  be  residents  of  the  State  ot 
California,  to  form  themselves  into  a  corporation,  9for  the  pur- 
pose of  carrying  out  any  lawful  objects. 

Corporations  for  profit  must  provide  10for  issuing  shares  of 
stock,  each  share  representing  a  proportional  interest  in  the 
corporation. 

When  a  corporation  is  to  be  formed,  ^Articles  of  Incorpo- 
ration must  be  prepared,  12filed  with  the  county  clerk  of  the 
county  in  which  the  principal  place  of  business  is  to  be  ;  and 
certified  copies  must  be  filed  with  13the  Secretary  of  State,  and 
the  clerk  of  every  county  in  which  the  corporation  holds  real 
property. 

The  Articles  of  Incorporation  must  set  forth  the  name, 
object,  principal  place  of  business,  number  and  names  of  the 
directors,  capital  stock  and  number  of  shares,  and  the  names 
of  subscribers,  with  amount  subscribed.  A  Certificate  of  In- 
corporation is  then  issued  by  the  Secretary  of  State. 

Powers  of  Corporations.  —  The  powers  of  a  corporation 
are  set  forth  I4in  its  charter.  The  charter  includes  15the  gen- 
eral law  under  which  it  is  organized,  and  the  Articles  of  In- 
corporation filed  at  the  time  of  organization.  These  powers 
are  18such  as  are  necessary  to  carry  out  the  objects  of  incorpo- 
ration. 

A  corporation  may  make  contracts,  and  take,  hold  and 
transfer  17such  real  estate  as  may  be  necessary  to  carry  out  its 
objects.  A  corporation  may  not  indorse  accommodation 
paper,  unless  the  loaning  of  its  credit  is  one  of  the  objects  of 
its  existence. 

A  corporation  by  the  very  fact  of  its  existence  has  power 
18to  admit  members,  to  elect,  and,  for  cause,  to  remove  officers, 
and  to  hold  meetings.  In  business  corporations  new  mem- 


70  CORPORA  TIONS. 


bers  are  admitted  19by  the  purchase  of  stock,  and  having  once 
acquired  an  interest  they  cannot  be  expelled  unless  the  power 
has  been  expressly  reserved  in  the  charter. 

A  subordinate  officer  or  agent  of  a  corporation  may  be  re- 
moved without  cause;  but  20a  superior  officer  must  be  notified 
and  there  must  be  sufficient  cause  for  removal. 

21No  notice  to  stockholders  of  a  regular  meeting  is  re- 
quired, but  of  any  special  meeting  22personal  written  notice  of 
the  time  and  place  of  such  meeting  must  be  given.  Where  there 
is  no  provision  as  to  meetings  23notice  must  be  given  of  all 
meetings  to  be  held. 

How  EXERCISED.  A  corporation  being  a  fictitious  entity, 
all  of  its  powers  must  be  exercised  24through  the  medium  of  its 
officers  or  agents,  and  the  power  to  appoint  agents  is  therefore 
incidental  to  all  corporations. 

The  administration  of  the  ordinary  affairs  of  a  corpora- 
tion is  committed  25to  a  body  of  members  called  directors  or 
trustees.  The  law  is,  that  the  number  of  directors  cannot  be  less 
than  three,  but  may  be  any  number  more  than  three.  It  is 
necessary  that  27all  of  the  directors  should  be  bona  fide  mem- 
bers, and  a  transfer  of  stock  to  a  person  simply  to  render  him 
eligible  would  not  be  sufficient  The  board  of  directors,  being 
trustees,  are  bound  by  all  of  28the  duties  of  ordinary  trustees, 
but  they  are  not  entitled  to  compensation  unless  there  is  ex- 
press provision  to  that  effect. 

The  officers  of  a  corporation,  president,  secretary,  etc., 
are  also  agents  for  the  corporation  29to  perform  such  acts  as  are 
generally  included  in  the  duties -of  such  officers. 

30Where  any  power  in  excess  of  his  ordinary  powers  is  given 
to  an  officer  or  body  of  officers,  the  authority  thus  given  can- 
not be  transferred  to  a  sub-agent  The  power  to  convey  the 
land  of  a  corporation  is  not  within  the  duties  of  any  officer,  and 
31rr,flSt  be  specially  granted  in  writing. 

The  corporation,  as  a  principal,  is  responsible  for  32any 
acts  of  its  agents,  committed  in  the  performance  of  their  regu- 
lar duty. 


CORPORATIONS.  71 


Rights  of  Stockholders.—  A  stockholder  is  a  member 
of  the  corporation  and  has  all  the  rights  appropriate  to  such 
membership.  A  share  of  stock,  however,  "does  not  represent 
an  ownership  in  the  property  of  the  corporation,  but  a  right  to 
receive  a  certain  proportion  of  the  profits  and  product  of  such 
property.  The  title  to  the  property  rests  "solely  in  the  corpora- 
tion itself. 

It  is  on  this  principle  that  stock  in  a  corporation  is  per- 
sonal property  even  though  it  may  be  the  business  of  the  cor- 
poration to  deal  in  real  estate.  "Certificates  of  stock  are  not 
negotiable  instruments,  however,  and  a  transfer  by  indorse- 
ment only  is  valid  between  the  parties  to  the  transfer,  but  is 
not  as  to  other  parties  until  the  change  has  been  made  on  the 
books  of  the  company. 

"Where  the  directors  or  other  officers  are  guilty  of  any 
action  tending  to  injure  the  property  of  the  corporation,  or  are 
guilty  of  any  breach  of  duty,  a  stockholder  may  have  them 
restrained  by  a  court,  or  may  recover  damages  from  them. 

When  a  stockholder  has  been  induced  to  purchase  stock 
in  the  corporation  by  false  statements,  made  by  the  directors 
with  intention  to  deceive,  37he  may  recover  damages  therefor; 
and  this  without  reference  to  whom  he  purchases  the  stock 
from. 

Each  stockholder  in  a  private  corporation  is  ""individually 
liable  for  such  proportion  of  all  the  debts  of  the  corporation  as 
the  shares  of  stock  which  he  held  at  the  time  of  the  indebtedness 
was  incurred,  bore  to  the  whole  body  of  stock,  and  he  may  be 
sued  therefor  independently  of  any  suit  against  the  corporation 
for  the  same  debt 


QUESTIONS. 


1.  What  is  a  corporation  ? 

2.  How  does  a  corporation  exist  in  legal  contemplation  ? 

3.  IIov.  does  a  corporation  differ  from  a  partnership? 

4.  What  is  the  general  rule  as  to  when  a  corporation  will  be  con- 
»ulered  as  a  person? 

5.  What  is  the  object  in  creating  corporations  ? 

6.  WThy  are  corporations  favored  ? 

HOW  CREATED. 

7.  What  is  necessary  to  create  a  corporation  ? 

8.  I  low  many  persons  may  form  a  corporation  ? 

9.  For  what  object  may  a  corporation  be  formed  ? 

10.  What  must  business  corporations  provide  for? 

1 1.  What  is  the  first  step  in  forming  a  corporation  ? 

12.  What  must  be  done  with  the  articles  of  incorporation? 

13.  To  whom  must  certified  copies  be  sent? 

POWERS  OF  CORPORATIONS. 

14.  In  what  are  the  powers  of  a  corporation  set  forth? 

15.  What  does  the  charter  include  ? 

1 6.  What  are  these  powers  ? 

17.  How  much  real  estate  may  a  corporation  hold  ? 

1 8.  What  powers  has  a  corporation  by  the  very  fact  of  its  existence  ? 

19.  How  are  new  members  admitted  in  business  corporations? 

20.  What  is  necessary  to  remove  a  superior  officer  of  a  corporation  ? 
21  Is  a  notice  to  stockholders  of  a  regular  meeting  necessary  ? 

22.  What  notice  must  be  given  of  a  special  meeting  ? 

23.  What  is  the  rule  where  there  is  no  provision  as  to  regular  meet- 
ing ? 

24.  How  must  the  powers  of  a  corporation  be  exercised  ? 

25.  To  whom  is  the  administration  of  the  ordinary  affairs  of  a  corpora- 
tion committed  ? 

26.  How  many  directors  must  there  be  ? 

(72) 


QUESTIONS.  73 


27.  What  is  necessary  that  a  person  should  be  eligible  as  director  ? 

28.  What  are  the  duties  of  directors  ? 

29.  To  what  extent  are  the  officers  of  a  corporation  agents? 

30.  When  may  an  officer  not  delegate  his  authority  ? 

31.  How  must  power  to  convey  land  be  given  ? 

32.  For  what  acts  of  its  agents  is  a  corporation  responsible  ? 

RIGHTS  OF  STOCKHOLDERS. 

33.  What  does  a  share  of  stock  represent  ? 

34.  In  whom  does  the  title  to  the  property  rest  ? 

35.  Are  certificates  of  stock  negotiable  instruments? 

36  When  are  directors  liable  to  a  stockholder  ? 

37  What  are  the  rights  of  a  defrauded  purchaser  of  stoc*  ? 
38.   What  is  the  liability  of  stockholders  ? 


FART   3. 

CERTAIN    SPECIAL    CASES    OF  CON- 
TRACT. 


CHAPTER  I. 

SALES  OF  PERSONAL  PROPERTY. 

Definition  and  Nature. — A  SALE  Is  *A  CONTRACT  BY 
WHICH,  FOR  A  PECUNIARY  CONSIDERATION,  ONE  PERSON 
TRANSFERS  TO  ANOTHER  THE  GENERAL  OR  ABSOLUTE  OWNER. 
SHIP  OF  A  THING. 

A  sale  being  a  contract,  all  of  the  elements  of  a  contract 
must  be  present. 

PARTIES.  The  parties  to  a  contract  of  sale  are  2the  seller, 
or  person  transferring  the  ownership,  and  the  buyer.  'Any 
person  owning  personal  property  may  sell  it,  and  any  person 
capable  of  entering  into  any  other  contract  may  become  a  pur- 
chaser. But  *a  person  who  has  obtained  possession  of  prop- 
erty by  theft  cannot  convey  a  good  title  to  it,  and  the  owner 
may  recover  it  as  long  as  it  can  be  identified.  Any  number  of 
changes  of  ownership  after  the  theft  would  not  affect  this 
right. 

CONSIDERATION.  The  consideration  in  a  sale  is  always  *a 
pecuniary  one.  When  the  consideration  is  anything  besides 
money,  the  agreement  is  called  6an  exchange,  or  barter.  Ex- 
change is  governed  by  very  much  the  same  rules  as  sale,  but 
they  are  considered  as  separate  forms  of  contract. 

SUBJECT  MATTER.  As  in  all  other  contracts  the  subject 
of  a  sale  must  be  clearly  identified  and  distinguished.  If  it  is 

(74) 


SALES  OF  PERSONAL  PROPERTY.         75 

not  so  distinguished,  or  if  it  has  ceased  to  exist,  7the  sale  is 
void.  The  thing  sold  must  also  have  an  actual  or  potential  ex- 
istence, or  the  agreement  would  amount  only  to  an  agreement 
to  sell  and  not  to  an  actual  sale.  A  thing  is  said  to  have  a 
potential  existence  8when  it  will  come  into  existence  at  some 
future  time  as  the  natural  product  or  increase  of  something  to 
which  the  seller  has  a  present  vested  right;  as  the  crop  of  grain 
to  be  grown  on  a  certain  field;  the  wool  to  be  clipped  from 
sheep,  or  the  young  of  a  band  of  sheep  or  herd  of  cattle. 

Delivery. — The  first  duty  of  the  seller  in  the  perform- 
ance of  a  contract  of  sale  is  'the  delivery  of  the  thing  sold. 
Delivery,  in  this  sense,  does  not  mean  an  actual  passing  over 
of  the  corpus  of  the  chattel,  but  wany  act  by  which  the  chattel 
is  placed  under  the  absolute  control  of  the  buyer.  In  the  ab- 
sence of  any  agreement  to  the  contrary  uthe  seller  is  not  bound 
to  do  more  by  way  of  delivery  than  to  put  the  article  in  such 
condition  that  the  buyer  has  nothing  to  do  but  to  take  it  away. 
Where  the  thing  sold  is  part  of  a  larger  quantity  "it  should 
be  separated,  but  the  delivery  is  to  be  13at  the  place  where  the 
article  was  at  the  time  of  sale. 

If  the  seller  agrees,  however,  to  deliver  at  any  certain 
place,  uhe  must  do  so,  and  must  follow  the  directions  of  the 
buyer  as  to  the  manner,  etc.,  of  sending.  Where  no  time  for 
delivery  is  expressed,  it  must  be  lswithin  a  reasonable  time. 
Delivery  may  be  16at  any  hour  sufficiently  early  to  give  the 
buyer  time  to  examine  the  goods  before  midnight,  but  the 
buyer  is  not  compelled  to  wait  for  them  after  sunset,  and  if  he 
is  not  there  there  can  be  no  delivery. 

Delivery  may  be  to  the  buyer  or  to  his  agent,  or  any  per- 
son authorized  by  him  to  receive  the  goods.  Delivery  to  a 
common  carrier  or  to  a  drayman  is  sufficient  to  pass  the  title. 
If  the  sale  is  for  cash,  i.  e.,  if  the  payment  is  a  concurrent 
condition,  the  delivery  must  be  "on  payment  or  tender  of  the 
price;  if  the  sale  is  on  credit  the  delivery  must  be  immediate 

If  the  delivery  is  of  a  less   or  greater  quantity  than  that 


76  SALES  OF  PERSONAL  PROPERTY. 

contracted  for,  18the  buyer  may  refuse  to  accept,  and  if  a  part 
has  been  received,  it  may  be  returned;  but  should  the  buyer 
accept  the  amount  offered  19he  is  bound  to  pay  for  it. 

Delivery  being  merely  a  placing  of  the  goods  under  the 
control  of  the  buyer,  it  may  be  by  symbol,  as  the  delivery  of 
the  key  of  the  place  in  which  the  goods  are,  or  the  bill  of  lad- 
ing, a  warehouse  receipt,  etc. 

A  delivery  to  be  valid  against  the  creditors  of  the  seller 
must  be  followed  by  Man  actual  and  continued  change  of  pos- 
session. Where  there  is  no  such  change  of  possession  "the 
sale  is  presumed  to  be  in  fraud  of  such  creditors  and  may  be 
.set  aside. 

Warranty. — A  warranty  is22a  collateral  undertaking,  form- 
ing a  part  of  the  agreement  of  the  parties.  In  popular  lan- 
guage it  is  more  commonly  called  a  guarantee,  but  in  law,  .0 
distinguish  it  from  an  agreement  to  answer  for  the  debt  of  an- 
other, it  is  known  only  as  a  warranty.  Warranties  may  be 
either  express  or  implied. 

AN  EXPRESS  WARRANTY  is  "ONE  BY  WHICH  THE  SELU  R 

COVENANTS  AND  UNDERTAKES  TO  INSURE  THAT  THE  CHATTF.  L 
WHICH  IS  THE  SUBJECT  OF  THE  CONTRACT  IS  AS  GUARANTEE!  . 

AN  IMPLIED  WARRANTY  is  "ONE  WHICH  NOT  BEING  EX- 
PRESSLY MADE,  THE  LAW  IMPLIES  BY  THE  FACT  OF  THE  SAL  ;. 

Every  affirmation  made  at  the  time  of  the  sale  is  a  war- 
ranty, provided  it  appear  to  have  been  so  intended.  And  it 
would  be  determined  from  the  circumstances  of  the  case 
whether  a  warranty  was  intended.  The  affirmation  must  have 
been  made  ^at  the  time  of  the  sale,  for  if  made  before  that 
time  it  would  be  ineffectual,  and  if  made  after  that  time,  it 
would  require  26a  new  consideration  to  support  it.  Where  an 
article  is  expressly  warranted  as  to  one  particular,  "all  implied 
warranties  as  to  other  particulars  would  be  excluded.  An  ex- 
press warranty  of  the  quality  of  the  article  sold  would  not  be 
extended  to  defects  which  were  plainly  visible  to  the  ordinary 
senses  of  the  buyer  at  the  time  of  the  sale. 


SALES  OF  PERSONAL  PROPERTY.  77 

In  regard  to  implied  warranties  the  tendency  is  not  to 
raise  them  in  the  case  of  executed  contracts.  Where  an  ar- 
ticle is  to  be  delivered  at  some  future  day,  however,  there 
is  an  implied  warranty  that  it  will  be  merchantable.  Where 
goods  are  sold  by  sample  there  is  an  implied  warranty  that 
they  are  equal  in  quality  to  the  sample;  and  provisions  for  do. 
mestic  use  are  warranted  to  be  fit  for  consumption.  Where 
the  seller  has  the  goods  in  his  possession,  there  is  an  implied 
warranty  ^that  the  title  is  in  the  seller. 

A  warranty  differs  from  a  fraud  ulent  representation  in  that 
"there  is  a  knowledge  of  the  falsity,  or  its  equivalent,  in  the 
latter  case  and  not  in  the  former. 

When  the  Property  Passes. — Where  there  is  a  com. 
plete  and  valid  sale,  the  ownership  of  the  property  passes  '"im- 
mediately on  the  completion  of  the  sale,  and  the  buyer  has  a 
right  of  possession,  irrespective  of  the  delivery.  The  seller 
if  he  retains  possession,  holds  the  property  31as  belong- 
ing to  the  buyer,  and  must  deliver  it  to  him  on  demand. 

If  the  sale  is  not  complete,  but  is  merely  an  agreement  to 
sell  at  some  future  time,  or  is  conditioned  on  any  act  or  event, 
the  ownership  does  not  pass,  and  here  again  the  transfer  of 
possession  does  not  alter  the  case.  If  the  goods  have  been 
delivered  into  the  possession  of  the  buyer,  he  holds  them  32un- 
til  the  sale  is  completed,  as  the  property  of  the  seller. 

In  any  of  the  following  cases  the  contract  would  amount 
only  to  an  agreement  to  sell,  and  not  to  an  actual  sale:  33(i) 
where  the  promisor  has  possession  of  the  property  and  agrees 
to  sell  it  at  some  future  time;  (2)  where  he  has  not  possession 
but  agrees  to  obtain  the  property  and  then  sell  it;  (3)  where  he 
agrees  to  manufacture  an  article  and  sell  it,  or  (4)  where  the 
agreement  is  to  sell  some  unidentified  or  indefinite  article.  •:) 

Where  there  is  any  condition  precedent  to  be  performed 
by  either  the  buyer  or  the  seller,  the  sale  is  not  complete  and 
the  property  does  not  pass  until  the  condition  is  performed. 
The  condition  may  be  waived,  however,  and,  where  it  relates 


78        SALES  OF  PERSONAL  PROPERTY. 


to  the  delivery,  a  delivery,  without  exacting  the  performance 
of  the  condition  would  be  a  waiver. 

Auction  Sales.— A  SALE  BY  AUCTION  Is  MA  PUBLIC 
SALE  WHKRE  GOODS  ARE  OFFERED  TO  BE  SOLD  TO  THE  HIGH- 
EST BIDDER. 

In  an  auction  sale  the  auctioneer  is  the  agent  of  both 
parties,  the  buyer  and  the  seller,  and  in  order  to  make  a  bind- 
ing sale  3Dhe  must,  at  the  time  of  the  sale,  make  an  entry  in  his 
books  showing  the  thing  sold,  the  name  of  the  buyer,  the 
terms  of  the  sale,  and  the  price.  Where  there  are  published 
conditions  of  sale  86if  they  have  been  brought  to  the  notice 
of  the  buyer  they  will  form  a  part  of  the  contract  and  will  be 
binding  upon  the  parties. 

An  auction  sale  is  complete  "on  the  falling  of  the  ham- 
mer. Before  that  the  goods  may  be  withdrawn  from  sale,  or 
the  bid  may  be  withdrawn.  After  the  fall  of  the  hammer 
the  sale  is  binding,  and  only  Mwhere  the  terms  of  the  sale  are 
contrary  to  the  understanding  of  the  buyer,  and  he  refuses 
on  the  spot  to  be  bound,  can  it  be  set  aside.  An  auction  sale 
may  be  set  aside  for  fraud  in  the  same  manner  as  any  other 
contract,  and  where  a  "  puffer "  is  engaged  to  bid  the  goods 
up,  S9if  his  bidding  mislead  the  buyer,  the  sale  may  be  re- 
scinded 


QUESTIONS. 


DEFINITION    AND   NATURE. 

1.  What  is  a  sale? 

2.  Who  are  the  parties  to  a  sale? 

3.  Who  may  sell  and  buy  personal  property? 

4.  Who  may  not  convey  a  good  title  ? 

5.  What  is  the  nature  of  the  consideration  in  a  sale  ? 

6.  When  the  consideration  is  anything  besides  money,  what  is  the 
agreement  called? 

7.  If  the  subject  of  the  sale  has  ceased  to  exist,  what  is  the  result  r 

8.  When  has  an  article  a  potential  existence  ? 

DELIVERY. 

9.  What  is  the  first  duty  of  the  seller  in  the  performance  of  a  sale  ? 

10.  What  is  meant  by  delivery  ? 

11.  In  the  absence  of  agreement  what  is  the  seller  bound  to  do'' 

12.  Where  the  thing  sold  is  a  part  of  a  larger  quantity,  what  should 
be  done  ? 

13.  Where  should  the  goods  be  delivered  ? 

14.  Where  the  seller  agrees  to  deliver  at  a  certain  place,  what  must 
he  do? 

15.  When  must  delivery  be  made  ? 

1 6.  At  what  hour  may  delivery  be  made  ? 

17.  When  the  sale  is  for  cash,  when  must  the  delivery  be  made? 

1 8.  If  the  delivery  is  not  of  the  quantity  contracted  for,  what  may  the 
buyer  do? 

19.  What  if  the  buyer  accepts  the  amount  offered  ? 

20.  To  be  valid  against  creditors  what  must  delivery  be  followed  by  ? 

21.  What  is  the  presumption  where  there  is  no  such  change  of  posses- 
sion ? 

WARRANTY. 

22.  What  is  a  warranty  ? 

23.  What  is  an  express  warranty? 
24    What  is  an  implied  warranty  ? 

25.   When  must  the  affirmation  have  been  made  ? 
(79) 


W)  QUESTIONS. 


26.  What  would  an  affirmation,  made  after  the  sale,  require  to  sup- 
port it  ? 

27.  What  is  the  result  of  an  express  warranty  as  to  one  particular? 

28.  Where  goods  are  in  possession  of  the  seller,  what  implied  war- 
ranty is  raised  ? 

29.  In  what  does  a  warranty  differ  from  a  intudulent  representation  ? 

WHEN    THE    PROPERTY   PASSES. 

30.  When  does  the  ownership  pass  in  a  complete  sale  ? 

31.  If  the  seller  retains  possession,  how  does  he  hold  the  property? 

32.  If  there  is  only  an  agreement  to  sell,  and  the  goods  have  been 
delivered,  how  does  the  buyer  hold  them  ? 

33.  What  are  the  four  cases  of  an  agreement  to  sell  ? 

AUCTION   SALES. 

34.  What  is  a  sale  by  auction  ? 

35.  What  is  necessary  to  make  a  sale  by  auction  binding  ? 

36.  When  do  the  published  conditions  of  sale  become  a  part  of  the 
agreement  ? 

37.  When  is  an  auction  sale  complete  ? 

38.  When  may  an  auction  sale  be  set  aside  after  the  fall  of  the  ham- 
mer? 

39.  What  is  the  effect  of  t  "  puffer*'? 


CHAPTER  II. 

NEGOTIABLE   INSTRUMENTS. 

Definition  and  Nature. — A  NEGOTIABLE  INSTRUMENT  Is 
WHICH  TRANSFERS  THE  LEGAL  RIGHT  SECURED  BY  IT,  BY 
ITS  DELIVERY  FROM  ONE  PERSON  TO  ANOTHER. 

There  are  six  different  classes  of  Negotiable  Instruments. 
These  are  2Bills  of  Exchange,  Promissory  Notes,  Bank  Notes. 
Checks,  Bonds,  and  Certificates  of  Deposit. 

A  BILL  OF  EXCHANGE  Is  3A  WRITTEN  ORDER  FOR  THE  PAY- 
MENT OF  A  CERTAIN  SUM  OF  MONEY  UNCONDITIONALLY. 

A  PROMISSORY  NOTE  Is  4A  WRITTEN  PROMISE  TO  PAY  A 
CERTAIN  SUM  OF  MONEY  UNCONDITIONALLY. 

BANK  NOTES  ARE  PROMISSORY  NOTES  ISSUED  BY  A  NATIONAL 
BANK,  AND  CIRCULATE  AS  MONEY. 

CHECKS  ARE  ORDERS  ON  BANKS,  OR  BANKERS,  AND  ARE 
ALWAYS  PAYABLE  ON  DEMAND. 

BONDS  ARE  PROMISSORY  NOTES  TO  PAY  MONEY,  USUALLY  OF 
LARGE  DENOMINATIONS,  AND  HAVE  ATTACHED  TO  THEM  SEPAR- 
ATE PROMISES  CALLED  COUPONS,  TO  PAY  THE  INTEREST  ON  THE 
BONDS. 

CERTIFICATES  OF  DEPOSIT  ARE  WHAT  THE  NAME  IMPLIES. 
THEY  ARE  ISSUED  BY  BANKS  TO  PERSONS  WHO  DEPOSIT  MONEY, 
AND  THEY  ARE  NOT  SUBJECT  TO  CHECK. 

The  parties  to  a  Bill  of  Exchange  are  5the  drawer,  or  per- 
son drawing  the  order;  the  drawee,  or  person  on  whom  the 
order  is  drawn,  and  the  payee,  or  person  to  whom  the  sum  of 
money  called  for  by  the  bill  is  to  be  paid.  The  parties  to  a 
Promissory  Note  are  6the  maker,  or  person  promising,  and  the 
payee,  or  person  to  whom  it  is  to  be  paid.  The  holder  of  a 
bill  or  note  7is  the  person  owning  it.  8A11  persons  may  be  parties 
to  bills  or  notes  except  those  specially  disabled,  as  minors,  those 
mentally  incapacitated,  etc. 

NEGOTIABILITY.  The  distinguishing  feature  of  this  class  of 
contracts  is  their  negotiability,  i.  e.,  9the  power  which  they  con- 
fer upon  the  holder  to  enforce  them  against  any  person,  whether 
maker,  drawee,  or  indorser,  without  any  consideration  passing 
between  the  parties  directly.  There  are  eight  essentials  to  every 
(")  6 


82  NEGOTIABLE  INSTRUMENTS. 

negotiable  instrument:  (1)  In  writing;  (2)  an  unconditional 
promise,  or  request,  except  that  it  may  provide  for  the  payment 
of  attorney's  fees  and  costs  of  suit;  (3)  negotiable  in  form;  (4) 
payable  in  money  only;  (5)  for  a  definite  sum;  (6)  to  a  desig- 
nated payee,  who  is  ascertainable ;  (7)  a  definite,  or  certain  time 
for  payment;  (8)  a  proper  signature. 

Transfer. — Negotiable  paper  is  made  payable  either  to  bearer 
or  to  order;  when  payable  to  bearer  it  may  be  transferred  "by 
delivery  alone.  When  the  instrument  is  payable  to  order,  12in 
addition  to  delivery  it  must  be  indorsed  by  the  payee.  An  in- 
dorsement is  13a  writing  on  the  back  of  a  negotiable  instrument 
sighed  b'y  the  payee  for  the  purpose  of  transferring  it.  Indorse- 
ments are  in  blank  or  in  full. 

An  indorsement  in  full  is  1*orie  which  mentions  the  name 
of  the  party  in  whose  favor  it  is  made.  Its  effect,  when  fol- 
lowed by  delivery,  is  15to  render  the  person  named  a  new  payee, 
andjthe  indqrser  liable  in  the  same  manner  as  the  drawer  of  a 
bill --of  exchange.  An  indorsement  in  blank  is  made  by  the 
payee  signing  his  name  on  the  back  of  the  instrument,  which 
renders  it  payable  to  bearer.  There  may  be  several  successive 
indorsements,  but  after  an  instrument  has  once  been  indorsed 
in 'blank,  it  cannot  be  restricted  by  a  subsequent  indorsement 
in  full.  But  the  payment  of  an  instrument  indorsed  in  blank 
cpn  tie ,  restricted  16by  writing  a  special  indorsement  over  the 
-4hrst  indorsement  in  blank. 

An  instrument .  may'  be  so  indorsed  as  to  restrain  its  ne- 
^gptiabiHty,  as,;  "pay  to  John  Doe  only;"  when  its  negotiability 
:would  be  at-  an  end.  Such  .an  indorsement  is  called  a  re- 
>  strictive  .indorsement.  An  indorsement  "without  recourse" 
^transfers  rftlje  instrument  without  the  person  transferring  as- 
suming the  liability  of  an  indorser. 

\o  ;-.t  An  ..instrument -may    be    indorsed    18at   any   time   before    it 
-Becomes  ,4ue;  or  3a£ter  ,it  is  due,  but  a  person  taking  a  negotia- 
ble fiustFument  after,  it  has  become  due  takes  it  subject  to  any 
claims  ?whicji /there  may  be  on  it._    An  indorsement  may  even 
^fore.lhe  instrument  was  .(irawn. 


NEGOTIABLE  INSTRUMENTS.  83 

An  indorser  undertakes  "to  the  indorsee  and  to  every  sub- 
sequent holder  that  the  instrument  will  be  discharged  by  the 
drawee  or  maker  when  it  becomes  due;  and  if  it  is  not  so  dis- 
charged he  becomes  liable  to  pay  it,  if  the  proper  steps  are 
taken  to  charge  him.  Where  a  negotiable  instrument  is  trans- 
ferred by  delivery  only  there  is  no  such  undertaking. 

Acceptance. — AN  ACCEPTANCE  Is  '""AN  UNDERTAKING 
IN  WRITING  BY  A  DRAWEE  THAT  HE  WILL  PAY  THE  BILL  OF 
EXCHANGE  AT  MATURITY. 

The  making  of  a  promissory  note  is  equivalent  to  the  ac- 
ceptance of  a  bill  of  exchange,  both  being  promises  to  pay, 
and  an  accepted  bill  is  governed  by  much  the  same  rules  as  a 
promissory  note.  On  the  other  hand  the  provisions  in  regard 
to  acceptance  do  not  apply  to  promissory  notes.  .<<[ 

On  receipt  of  a  bill  of  exchange,  or  a  draft  as  it  is  often 
called,  the  payee  should  present  it  to  the  drawee  for  acceptT 
ance.  Presentment  for  acceptance  is  necessary  "only  in  the 
Case  of  bills  payable  a  certain  time  after  sight,  but  it  is  always 
advisable.  A  bill  payable  at  a  specified  time  after  sight  mus{ 
be  presented  ^within  ten  days  after  the  time  which  would  suf? 
fice  with  ordinary  diligence  to  forward  it  to  the  drawee  for  acT 
ceptance.  i  j,!;  , 

Where  a  bill  is  payable  at  a  fixed  time  after  date,  it  may  be 
presented  for  acceptance  at  any  time  before  it  is  due.  When  a 
bill  is  presented  for  acceptance  the  drawee  may  be  allowed 
"twenty-four  hours  in  which  to  decide  whether  he  will  accep$ 
or  not.  If  more  time  is  given,  24all  prior  parties  must  be  nqtit 
fied  or  they  will  be  discharged.  .-•  ";..T  u,fa  .,.  v. >tf} 

Acceptance  may  be  in  any  form,  no  particular  words  be- 
ing necessary,  so  .that  the  intention  clearly  appears.  ,It  nee$ 
hot  even  be  upon  the  bill  itself,  provided  the  bill  is  descr^b^ci 
with  sufficient  certainty  for  identification.  But  it;  must:  be,, in 
writing,  ^and  an  oral  acceptance  would  be;  ineffectual,;  ,7$. 
written  promise  to  accept,  36even  whe  n  made  befpre,  the ,  b  jlj 
was  drawn,  would  be  binding  as  an  acceptance  in ;  favor  p(f;any 


84  NEGOTIABLE  INSTRUMENTS. 

person  who,  upon   the  faith   of  such  promise,  has  taken  the 
bill  for  value. 

27 An  acceptance  may  be  conditional,  as  where  thepaymenl 
is  restricted  to  a  certain  place,  or  time,  or  upon  the  happening 
of  a  certain  event,  and  when  the  payee  takes  such  conditional 
acceptance  he  is  bound  by  it.  But  a8the  payee  is  not  bound  tc 
take  anything  but  an  absolute  acceptance,  and  may  refuse  tc 
do  so.  An  acceptance  admits  the  signature  of  the  drawer  tc 
be  genuine,  and  therefore  the  drawee  after  accepting  cannot 
set  up  the  defense  that  the  name  of  the  maker  has  been  forged. 
When  an  acceptance  is  once  complete  and  issued  it  cannot  be 
withdrawn,  but  before  it  is  issued  it  may  be  revoked  at  any  time. 
ACCEPTANCE  FOR  HONOR.  Where  acceptance  has  been  refused 
by  the  drawee,  another  person  may,  with  the  consent  of  the 
holder,  accept  the  bill  for  honor;  but  the  holder  may  refuse  to 
receive  such  an  acceptance.  An  acceptance  for  honor  is  ^an 
agreement  by  some  person  other  than  the  drawee,  that  if  the 
note  is  not  paid  by  the  drawee  at  maturity,  he  will  pay  it.  "It 
is  made  for  the  purpose  of  preserving  the  credit  of  some  party 
to  the  bill,  and  the  acceptor  for  honor  must  write  on  the  bill 
for  whose  honor  he  accepts  it,  and  notify  such  party  of  his  ac- 
ceptance. Generally  there  cannot  be  two  acceptances  of  a 
bill,  but  after  it  has  been  accepted  for  the  honor  of  one  party 
it  may  be  accepted  for  the  honor  of  another.  As  an  accept- 
ance for  honor  is  merely  an  undertaking  to  pay  if  the  drawee 
do  not,  the  bill  must  be  presented  to  the  drawee  at  maturity, 
and  the  acceptor  must  be  notified  of  the  dishonor  if  the 
drawee  then  refuses  to  pay. 

Presentment  for  Payment. — The  undertaking  of  the 
maker  of  a  promissory  note  or  the  acceptor  of  a  bill  of  ex- 
change is  absolute,  and  it  is  not  necessary  that  the  instrument 
should  be  presented  at  maturity  in  order  to  bind  them. 
Even  where  the  instrument  is  payable  on  demand,  the  com- 
mencement of  a  suit  is  considered  a  sufficient  demand. 
Where  the  instrument  is  payable  at  a  certain  place,  and  the 


NEGOTIABLE  INSTRUMENTS.  8ft 

maker  or  acceptor  is  at  that  place  ready  to  pay,  this  would  only 
amount  to  an  offer  of  payment  to  stop  the  running  of  inter- 
est. 

But  the  undertaking  of  "indorsers,  the  drawer  of  a  bill  of  ex- 
change, and  acceptors  for  honor  being  to  pay  in  case  of  a 
default  of  another,  presentment  for  payment  is  necessary  in 
order  to  fix  their  liability.  Presentment  must  be  by  the 
holder,  S2to  the  maker,  acceptor,  or  where  the  instrument  is 
payable  at  a  certain  place,  to  the  person  in  charge  at  that 
place.  Where  no  place  of  payment  is  expressed  it  may  be 
Mto  the  maker  or  acceptor  wherever  he  may  be  found,  or  at 
his  residence  or  place  of  business,  at  the  option  of  the  holder. 
54 Where  the  instrument  is  payable  on  a  certain  day,  present- 
ment must  be  made  on  that  day  during  business  hours.  No 
days  of  grace  are  allowed  in  this  State. 

There  are  certain  circumstances  which  will  excuse  pre- 
sentment for  payment.  ^Where  the  drawee  of  a  bill  of  ex- 
change has  not  the  capacity  to  accept,  or  where  he  has  been 
actually  forbidden  by  the  drawer  to  accept  or  to  pay,  present- 
ment would  be  an  idle  act,  and  therefore  unnecessary.  But 
these  circumstances  must  exist,  and  the  payee  merely  thinking 
the  facts  to  be  so  would  not  excuse  presentment,  unless 
they  actually  were  so.  36When  the  drawee  is  out  of  the  State, 
and  his  residence  or  place  of  business  cannot,  with  reasonable 
diligence,  be  found,  or  when  the  drawer  at  the  time  of  draw- 
ing the  bill  had  no  reason  to  believe  that  the  drawee  would 
pay,  presentment  would  be  unnecessary.  Presentment  is 
also  excused  as  to  any  person  who,  within  ten  days  before 
maturity,  informs  the  holder  that  it  will  be  dishonored.  But 
I7the  insolvency  of  the  drawee  is  no  excuse  for  not  presenting 
the  bill;  and,  in  all  cases,  presentment  is  advisable. 

Notice. — In  case  of  the  refusal  to  pay  or  to  accept  a 
negotiable  instrument,  or  its  dishonor  as  it  is  called,  notice 
must  be  given  Mto  all  parties  who  are  to  be  held  bound  on  it. 
Notice  does  not  mean  merely  knowledge  of  the  fact  of  dis- 


NEGOTIABLE  INSTRUMENTS. 


honor,  and  a  failure  to  give  notice  is  not  excused  by  the  fact 
that  the  party  knew  of  the  dishonor.  The  object  of  notice  is 
two-fold:  to  notify  the  party  to  be  bound  of  the  dishonor  of 
the  instrument,  and  to  notify  him  that  he  will  be  held  for  the 
payment.  Notice  may  be  given  3'by  the  holder  or  by  any  per- 
son who  may  be  compelled  to  pay  the  instrument,  and  a  valid 
notice  given  by  any  party  enures  to  the  benefit  of  all  parties 
whose  right  to  give  such  notice  has  not  been  lost. 

No  particular  form  of  notice  is  necessary,  and  it  may  be 
written  or  oral,  provided  the  instrument  is  described  with  rea- 
sonable certainty,  and  the  fact  of  dishonor  is  set  forth.  Any 
error  in  describing  the  instrument,  which  does  not  mislead  the 
party  notified,  is  immaterial. 

Notice  may  be  given  **by  delivering  it  to  the  person  to  be 
charged  personally;  to  any  person  of  discretion,  at  the  resi- 
dence or  place  of  business  of  the  party  to  be  noti  fied  and  ap- 
parently acting  for  him;  or  by  sending  it  by  mail  to  his  last 
known  address.  Where  the  party  to  be  notified,  is  dead, 
notice  must  be  sent  to  his  personal  representatives.  But  a 
notice  sent  in  good  faith  after  the  death  of  the  party  is  valid. 

Notice  must  be  sent  "before  the  close  of  the  day  succeed- 
ing the  dishonor,  but  where  notice  is  sent  by  mail  it  must  be 
placed  in  the  post-office  before  noon  of  that  day.  The  holder 
must  notify  all  prior'  parties  whom  he  intends  to  hold,  within 
this  time,  but  each  person  notified  has  until  the  day  after  his 
notification  to  notify  prior  unnotified  parties.  Where  the 
holder  is  the  agent  for  a  principal  for  collecting  the  instru- 
ment, as  in  the  case  of  a  bank,  he  has  the  same  time  to  notify 
the  principal  as  in  the  case  of  notifying  an  indorser. 

Notice  is  excused  "when  the  party  to  be  notified,  or  his 
residence  or  place  of  business  cannot,  with  reasonable  diligence, 
Jbe  found,  or  \vherc  there  can  be  no  post-orrice  communication 
with  him.  When  anjndorser  has  received  full  security  for  the 
r^a^n|ent  of  the  instrument  before  maturity,  notice  is  excused, 
If  any  party,  within  ten  days  before  maturity,  notifies  the  holder 


NEGOTIABLE  INSTRUMENTS.  87 

that  the  instrument  will  be  dishonored,  notice  will  be  excused 
as  to  him.  Notice  and  presentment  may  be  expressly  waived, 
and,  where  presentment  is  waived  the  notice  is  also  waived; 
though  the  opposite  does  not  hold  true,  and  the  instrument 
must  be  presented  though  notice  has  been  waived.  Delay  in 
presentment  or  in  notice,  when  caused  by  unavoidable  circum- 
stances, is  excused. 

Protest. — A  bill  of  exchange  is  either  inland  or  foreign. 
An  inland  bill  is  **one  drawn  and  payable  within  this  State; 
all  others  are  foreign.  Notice  of  dishonor  of  foreign  bills  can 
be  given  only  by  notice  of  its  protest. 

A  protest  is  **a  writing  by  a  notary  public,  setting  forth 
that  he  has  presented  the  bill  to  the  party  bound  and  de- 
manded payment,  and  that  payment  has  been  refused.  Where 
a  cause  for  the  refusal  to  pay  is  given,  it  must  be  stated.  The 
protest  must  be  in  writing,  and  must  be  made  in  the  same 
city  or  town  where  the  demand  was  mad ;.  ^Where  a  notary 
public  cannot,  with  reasonable  diligence,  be  found,  protest  may 
be  by  any  reputable  person  in  the  presence  of  two  witnesses. 
A  protest  must  at  least  be  noted  on  the  day  of  presentment  or 
on  the  next  business  day.  Noting  consists  in  making  a  mem- 
orandum of  the  initials  of  the  notary  public,  or  other  person 
protesting,  the  day,  month,  and  year  when  the  demand  was 
made,  and  the  reason,  if  any  assigned,  of  non-payment- 
Where  protest  is  waived,  notice  may  be  given  in  the  same 
manner  as  in  the  case  of  an  inland  bill. 

Payment. — "Payment  extinguishes  the  obligation  on  the 
note  as  to  all  parties,  subsequent  to  the  person  paying;  but 
the  note  remains  in  full  force  and  effect  as  to  all  prior  parties. 
The  holder  is  entitled  to  the  amount  called  for  by  the  face  of  the  in- 
strument, with  interest  Where  interest  is  4eclare.d  to  run  from  a 
certain  date,  it  would  run  from  that  time;  where  interest  is  re- 
served but  no  date  expressed,  it  would  run  from  the  date  of 
the  note.  If  no  interest  is  expressly  reserved  it  would  run  at 
the  legal  fate  (now  7%)  from  the  maturity  *>f  -the; instrument* 


88  NEGOTIABLE  INSTRUMENTS. 


4TA  negotiable  instrument  always  imports  a  consideration,  even 
though  none  is  stated.  Even  the  words  "for  value  received" 
are  unnecessary.  Where  one  in  the  due  course  of  trade,  in 
good  faith,  for  value,  and  before  maturity,  takes  a  negotiable 
instrument,  he  acquires  an  absolute  title  thereto  free  from  all 
equities. 

But  between  immediate  parties  and  between  the  maker  and 
one  who  takes  after  maturity,  or  with  notice,  all  equitable  de- 
fenses are  available,  as  insufficiency  of  the  consideration.  Where 
the  note  has  gone  into  the  hands  of  a  bona  fide  purchaser  in  the 
dtfe  course  of  trade,  this  presumption  cannot  be  rebutted.  But  be- 
tween immediate  parties  the  holder  cannot  recover  more  than 
the  actual  consideration  paid. 

A  person  taking  a  negotiable  instrument  after  maturity  is 
charged  with  notice  of  any  facts  connected  with  it,  because  the 
date  of  payment  having  passed  is  enough  to  put  him  upon  in- 
quiry. Where  a  note  or  bill  is  payable  on  demand,  with  interest, 
it  is  presumed  to  mature  48one  year  from  date,  and  a  person 
taking  it  after  that  time  does  so  at  his  own  risk.  If  no  interest 
is  reserved,  a  demand  note  is  presumed  to  mature  within  six 
months  from  date;  a  sight  draft,  ten  days  after  date,  in  addition 
to  the  time  necessary,  with  ordinary  diligence  to  forward  it  for 
acceptance. 

PAYMENT  FOR  HONOR.  A  bill  which  has  been  dishonored 
may  be  paid  by  a  stranger  for  the  honor  of  any  one  of  the  parties 
thereto.  In  the  case  of  a  foreign  bill  "payment  for  honor  must  not 
be  inade  until  after  protest.  A  person  paying  a  bill  for  the  honor 
of  another  must  write  on  the  bill  for  whose  honor  the  payment 
is  made ;  and  he  must  declare  the  same  in  the  presence  of  a  per- 
son authorized  to  make  protest  in  the  case  of  a  foreign  bill. 
The  person  paying  must  also  give  notice  to  the  person  for  whose 
honor  the  payment  is  made,  and  he  is  then  entitled  to  reimburse- 
ment. ^ 

Accommodation  Paper.— Accommodation  notes  or  bills 
are  made,  where  there  is  no  consideration  passing  between 
the  parties,  Mfor  the  purpose  of  enabling  one  of  the 
parties  to  borrow  money.  It  is  a  loan  of  the  credit  of  the 
party  making  the  accommodation.  As  there  is  no  considera- 
tion passing  from  the  party  accommodated  the  paper  is  with- 
out value  in  his  hands;  but  any  person  taking  it  for  a  valuable 


NEGOTIABLE  INSTRUMENTS.  89 

consideration,  whether  with  knowledge  of  its  character  or  not^ 
acquires  the  same  rights  as  in  other  negotiable  paper. 

Although  on  negotiable  paper  no  party  has  a  right  of  ac- 
tion against  any  subsequent  party,  in  accommodation  paper, 
the  party  accommodating  may  sue  the  accommodated  party 
for  the  money  advanced,  though  not  on  the  note.  "Where 
accommodation  paper  is  made  or  indorsed  for  a  particular 
purpose  in  which  the  accommodating  party  has  a  legal  in- 
terest, and  the  accommodated  party  uses  the  instrument  for 
another  purpose,  the  holder  must  show  that  he  took  it  without 
any  knowledge  of  the  purpose  for  which  the  instrument  was 
made  or  indorsed. 

Lost,  Stolen,  and  Forged  Paper. — Where  a  bill  or 
note  is  lost  the  finder  acquires  no  title  against  the  rightful 
owner  or  the  original  parties.  If  the  instrument  was  indorsed 
in  blank  so  that  it  might  pass  by  delivery  alone  83a  purchaser 
in  good  faith  and  without  notice  would  acquire  a  valid  title 
even  against  the  rightful  owner.  But  any  notice,  actual  or  im- 
plied, of  the  fact  that  the  instrument  had  been  lost  would 
invalidate  his  title.  If  the  bill  or  note  was  not  indorsed  in 
blank,  it  could  pass  only  by  indorsement,  which  would  neces- 
sitate a  forgery,  and  a  good  title  cannot  be  traced  through  a 
forgery.  Application  for  payment  and  notice  of  dishonor  must 
be  made  in  the  case  of  lost  paper,  in  the  same  manner  as  if  it 
had  not  been  lost. 

The  owner  of  a  lost  bill  or  note  may  obtain  payment  Mby 
giving  a  bond,  executed  by  himself  and  two  sufficient  sureties> 
to  indemnify  the  party  paying  against  any  lawful  claim  thereon. 
The  same  rules  govern  in  the  case  of  destroyed  or  stolen  paper 
as  in  that  of  lost  paper. 

Where  the  name  of  any  party  has  been  forged  whether  as 
maker,  acceptor,  drawer,  or  indorser  Mhe  is  not  bound,  even  as 
to  persons  taking  the  paper  for  a  valuable  consideration.  No 
holder  can  sustain  a  claim  which  depends  upon  a  forged  in- 
dorsement, or  signature.  But  the  signature  of  any  party 


90  NEGOTIABLE  INSTRUMENTS. 

admits  all  prior  signatures  to  be  correct,  and  a  person  after 
accepting  or  indorsing  an  instrument,  cannot  set  up  a  defense 
that  the  signature  of  some  prior  party  was  forged.  While  the 
signature  of  a  party  admits  all  prior  signatures  to  be  correct, 
such  a  signer  is  not  bound  on  an  instrument  which  has  been 
raised,  or  otherwise  materially  altered  after  indorsement. 

Checks. — A  check  is  a  variety  of  bills  of  exchange  which 
differs  from  others  55in  being  always  drawn  on  a  bank  or 
banker,  and  in  being  always  payable  on  demand.  A  check 
does  not  give  a  right  of  action  against  the  bank  to  enforce  its 
collection. 

Certifying  a  check  by  a  bank,  or  by  its  agent  having 
authority,  is  equivalent  to  56the  acceptance  of  a  bill  of  exchange, 
and  a  certified  check  must  be  paid  by  the  bank  whether  the 
drawer  has  funds  there  or  not.  A  check  must  be  presented 
within  a  reasonable  time  after  its  receipt;  and  one  day  after 
delivery,  together  with  the  time  necessary  for  transportation  to 
the  bank,  where  the  holder  lives  in  another  place,  would  gen- 
erally be  held  to  be  a  reasonable  time.  If  the  check  is  not 
presented  within  a  reasonable  time  57the  holder  would  be  liable 
for  any  resulting  damages  to  the  drawer. 

The  drawer  is  entitled  to  a  demand  and  notice  in  case  of 
non-payment  by  the  bank,  in  order  to  fix  his  responsibility. 
Demand  and  notice  are  excused  58where  the  drawer  has  reason 
to  believe  the  bank  would  not  pay  the  check. 

When  checks  on  another  bank  are  deposited  with  a  bank, 
they  are  received  59for  collection,  and  if  not  paid,  any  credit, 
which  may  have  been  made  on  their  account,  may  be  crossed 
out. 


• 

••  •    »fdjKfI&Y  ...-:..      • '  •    .   •'  • 

i  .  .  \ 

. 


QUESTIONS. 


DEFINITION    AND   NATURE. 

1.  What  is  a  negotiable  instrument? 

2.  What  are  the  classes? 

3.  What  is  a  bill  of  exchange? 

4.  What  is  a  promissory  note? 

5.  Who  are  the  parties  to  a  bill  of  exchange? 

6.  Who  are  the  parties  to  a  promissory  note? 

7.  Who  is  the  holder? 

8.  Who  may  be  parties  to  bills  or  notes? 

9.  What  is    negotiability? 

10.  What  are  the  three  requisites  of  negotiability? 

TRANSFER. 

11.  How  may  paper  payable  to  bearer  be  transferred? 

12.  What  is  necessary  where  it  is  payable  to  order? 

13.  What  is  an   indorsement? 

14.  What  is    an    indorsement   in    full? 

15.  What  is  its  effect? 

16.  How  may  the  payment  of  an  instrument  indorsed  in  blank 
be   restricted? 

17.  What  is  the  effect  of  an  indorsement  "without  recourse"? 

18.  When  may  an   indorsement  be  made? 

19.  What  is  the  undertaking  of  the  indorser? 

ACCEPTANCE. 

20.  What  is  an  acceptance?  .,    .-••; 

21.  When  is  presentment  for  acceptance  necessary? 

22.  When  must  a  bill  payable  at  a  specified  time. after  sight  be 
prc^nted  ?    . . 

23.  How  loi  _  may  the  drawee  be  allowed  to  decide  whether 
he  will  accept? 

24.  What  must  be  done  where  more  'time  is  given? 

25.  What  is'the  effect  of  an  oral  acceptance fv/  "'iv/ 

(«) 

'  '  ' 


QUESTIONS. 


26.  As  to  whom  would  a  written  promise  to  accept  be  binding,  and 
when? 

27.  May  an  acceptance  be  conditional  ? 

28.  Is  the  payee  bound  to  take  such  an  acceptance  ? 

29.  What  is  an  acceptance  for  honor  ? 

30.  What  is  its  object  ? 

PRESENTMENT  FOR    PAYMENT, 

31.  As  to  whom  is  presentment  necessary  ? 

32.  To  whom  must  presentment  be  ? 

33.  Where  no  place  of  payment  is  expressed,  to  whom  most  present- 
ment be  ? 

34.  When  must  presentment  be  ? 

35.  When  is  presentment  unnecessary  ? 
36.-  In  what  other  car**? 

37.  What  is  the  effect  ot  the  insolvency  of  the  drawee? 

NOTICE. 

38.  To  whom  must  notice  of  dishonor  be  given  ? 

39.  By  whom  may  notice  be  given  ? 

40.  How  may  notice  be  given  ? 

41.  When  must  notice  be  given  ? 

42.  When  is  notice  excused  ? 

PROTEST. 

43.  What  is  an  inland  bill? 

44.  What  is  a  protest  ? 

45.  When  may  a  protest  be  by  a  person  other  than  a  notary  public  ? 

PAYMENT. 

46.  What  is  the  effect  of  payment  ? 

47.  On  what  ground  may  payment  be  refused  ? 

48.  When  is  a  demand,  note  or  bill  presumed  to  mature  ? 

49.  When  may  payment  for  honor  of  a  foreign  bill  be  made  ? 

ACCOMMODATION  PAPER. 

50.  What  is  the  object  of  accommodation  paper  ? 

51.  Where  made  for  a  particular  purpose,  what  is  the  effect  of  a 
diversion  ? 

LOST,   STOLEN  AND   FORGED. 

52.  Who  would  acquire  a  good  title  to  indorsed  lost  paper  ? 

53.  How  may  the  owner  of  a  lost  bill  or  note  obtain  payment^ 

54.  What  is  the  liability  of  a  person  whose  name  has  been  forged? 


QUESTIONS. 


CHECKS. 

55.  How  does  a  check  differ  from  other  bills  of  exchange  ? 

56.  What  is  certifying  a  check  equivalent  to  ? 

57.  What  is  the  effect  of  not  presenting  a  check  within  a  reasonable 
time? 

58.  When  are  demand  and  notice  excused  as  to  a  check  ? 

59.  How  are  checks  on  another  bank  receired  by  a  bank  ? 


CHAPTER  III. 

BAILMENTS. 

Definition  and  Nature. — A  BAILMENT  Is  *A  CONTRACT 
BY  WHICH  A  SPECIFIC  CHATTEL  Is  DELIVERED  BY  ONE  PERSON 
TO  ANOTHER  TO  BE  HELD  ACCORDING  TO  THF-  SPECIAL  PUR- 
POSE OF  THE  DELIVERY,  AND  THEN  TO  BE  RETURNED. 

'The  person  delivering  the  article  is  called  the  bailor;  the 
person  to  whom  it  is  delivered  is  called  the  bailee.  In  order 
that  a  contract  shall  be  that  of  bailment  three  essentials  must 
be  present  in  the  agreement:  3it  must  be  for  the  delivery  of  a 
certain,  specific  chattel  by  the  bailor  to  the  bailee;  the  bailee 
must  agree  to  return  the  identical  chattel  to  the  bailor;  and 
the  absolute  ownership  of  the  chattel  must  remain  in  the 
bailor.  Where  another  article,  though  of  the  same  kind  as  the 
thing  bailed,  is  to  be  returned,  the  agreement  is  one  of  ex- 
change, and  not  of  bailment;  but  where  the  three  requisites 
stated  above  are  present,  the  contract  is  a  bailment. 

Closely  connected  with  the  subject  of  bailments,  and  gov- 
erned by  much  the  same  rules,  is  the  subject  of  common 
carriers  of  passengers,  and  it  will  be  included  under  this  topic. 

CLASSES.  Bailments  are  of  two  classes:  Gratuitous  and 
Compensated.  Gratuitous  bailments  are  again  divided  into 
two  classes:  those  for  the  benefit  of  the  bailor  solely;  and  those 
for  the  sole  benefit  of  the  bailee.  Compensated  bailments  are 
for  the  benefit  of  both  parties. 

Gratuitous  Bailments. — i.  FOR  THE  BENEFIT  OF  THE 
BAILOR.  Gratuitous  bailments  for  the  benefit  of  the  bailor 
arise  in  a  number  of  cases.  *The  bailor  may  deposit  some 
chattel  with  the  bailee  to  be  held  by  him  without  compensa 


BAILMENTS.  95 


»i'on,  until  a  redelivery  is  demanded;  or  he  may  deliver  the 
article  to  have  some  work  performed  upon  it  by  the  bailee 
without  compensation.  In  these  cases  the  contract  is  a  vol- 
untary or  express  one,  but  it  may  also  be  involuntary  or  im- 
plied. As  where  the  property  of  one  person  comes  into 
possession  of  another,  without  negligence  on  the  part  of  the 
owner;  or  where  property  is  obtained  at  a  fire  or  shipwreck. 
In  these  cases  a  contract  of  bailment  is  raised,  and  the  per- 
son holding  the  article  keeps  it  as  a  bailee. 

RIGHTS  OF  BAILEE.  A  bailee  acquires  6a  qualified  owner- 
ship of  the  chattel  bailed,  which  entitles  him  to  possession 
against  all  parties  but  the  legal  owner.  He  may  retain  the 
article  against  the  real  owner  until  demand  is  made  for  its 
.return.  Where  there  is  no  agreement  that  the  article  is  to  be 
used,  the  bailee  may  not  use  it  or  permit  it  to  be  used,  without 
the  consent  of  the  bailor. 

Where  for  the  care  or  protection  of  the  article  the  bailee 
is  obliged  to  go  to  any  expense,  he  is  entitled  to  reimbursement 
therefor. '   But  if  the  expenses  were  naturally  connected  with 
the  undertaking  of  the  bailee,  he  would  not  be  entitled  to  re- 
imbursement.    As  where  the  bailee  agrees  to  keep  the  horse 
of  bailor,  he  would  not  be  entitled  to  payment  for  the  feed 
given  to  the  horse.     If  there  were  an  agreement  for  reimburse- 
ment,  the  bailment  would  be  a  compensate^  and  not  a  gra- 
,  tuitous  one.     Where  7any  injury  results  to  the  bailee  from  vices 
or  defects  in  the  article  bailed,  and  the  defect  is  known  to  the 
bailor,  the  bailee  may  recover  damages  for  such  injury.     If  the 
..chattel  bailed  is  liable  to  be ;  destroyed,:  8and  there  is  no  time 
to  communicate  with  the  bailor,  tbe  bailee  may  sell  it,  and 
i  hold  the  proceeds  on  deposit  for  trje  bailor. 
a:  '. -  PXTTTiES iQF  .BAILEE. r    The  first  duty  of , the  bailee  is  'to 
/keep  the  chattel  safely*  and  $p  return,  %pn  jcjjemand.     Should 
any  loss:  of.  damage  result;  from  ;hi$fi>§g^gejt!ijce,  he  would  bie 
liable  for  the,  am^ur^but^liis  ^njeglig^nge^wheiiei  the  bailment 
is  for  the  sole  benefit  of  the  bailor,  must  of  course  be  moi* 


BAILMENTS. 


extreme  than  where  it  is  compensated  or  for  the  benefit  of  the 
bailee.  When  the  bailee  uses  the  chattel  wrongfully,  he  is 
liable  for  any  resulting  damage.  But  if  the  injury  would  have 
been  inflicted  whether  the  article  had  been  so  used  or  not,  the 
bailee  would  not  be  so  liable. 

If  there  is  any  loss  or  damage  to  the  chattel,  and  the 
bailee  neglects  or  refuses  to  inform  the  bailor  of  such  loss  or 
damage  and  of  the  circumstances  connected  therewith,  "it  is 
presumed  to  have  resulted  from  his  negligence,  and  the  bailee 
becomes  liable  therefor.  In  any  case,  however,  "where  the 
bailor  has  stated  some  amount  to  the  bailee  as  the  value  of  the 
thing  bailed,  the  liability  for  damages  cannot  exceed  this  sum. 

Where  the  agreement  is  that  the  bailee  shall  do  some 
work  on  the  chattel  bailed,  without  compensation,  he  may  re- 
fuse to  carry  out  the  agreement  12at  any  time  before  he  has 
commenced  to  perform  it,  for  there  is  no  consideration  to  sup- 
port it.  But  after  he  has  commenced  to  perform  his  agree- 
ment, by  receiving  the  article,  or  commencing  on  the  work,  he 
is  bound  to  finish  it  in  a  proper  manner. 

RIGHTS  AND  DUTIES  OF  BAILOR.  A  duty  resting  upon 
one  person  raises  a  right  in  another,  and  therefore  lsthe  rights 
and  duties  of  bailors  correspond  with  the  duties  and  rights  of 
bailees. 

2.  FOR  THE  BENEFIT  OF  THE  BAILEE.  The  only  case  of 
a  gratuitous  bailment  for  the  benefit  of  the  bailee  is  in  the 
case  of  a  loan  of  money  or  goods.  Where  the  article  is 
loaned  to  be  used  in  any  particular  manner,  it  must  be  so  used, 
and  14the  bailee  is  liable  for  any  loss  or  injury  to  the  chattel, 
even  though  such  loss  or  injury  was  not  the  immediate  result 
of  such  wrongful  use.  Where  the  bailment  is  for  the  benefit 
of  the  bailee,  he  is  bound  to  use  extreme  care  and  diligence  in 
the  protection  of  the  article,  and  the  least  negligence  on  his 
part  would  render  him  liable.  In  other  respects  the  rights  and 
duties  of  bailors  and  bailees  in  this  class  are  the  same  as  in 
the  former  class. 


BAILMENTS.  97 

Compensated  Bailments. — Compensated  bailments 
are  I8those  which  are  for  the  mutual  benefit  of  both  parties. 
They  are  of  two  classes — "pledge  and  hiring. 

PLEDGE.  A  pledge  is  "a  bailment  in  which  the  chattel 
is  transferred  as  security  for  some  debt,  and  it  is  to  be  rede- 
livered  on  the  payment  of  that  debt.  18The  person  delivering 
the  article  is  usually  called  the  pledger;  the  person  receiving 
it,  the  pledgee.  There  is  sometimes  an  agreement  that  the 
article  pledged  shall  remain  in  the  keeping  of  some  third 
person;  such  person  is  called  a  pledge-holder.  A  pledge  differs 
from  a  mortgage  of  personal  property,  which  is  also  a  pledging 
of  property  for  securing  a  debt,  "in  requiring  a  transfer  of 
possession. 

It  is  necessary  in  order  that  the  pledgee  may  enforce  his 
rights  against  the  property,  ""that  it  should  be  placed,  and 
should  remain  under  his  control.  Absolute  delivery  is  not 
necessary,  provided  the  pledgee  obtains  control;  and  he  may 
give  up  possession,  even  to  the  pledger  himself,  for  some  special 
and  temporary  purpose. 

RIGHTS  OF  PLEDGEE.  The  ownership  of  the  pledgee. 
while  being  only  a  qualified  one,  is  greater  than  that  of  bailees 
in  gratuitous  bailments.  In  addition  to  his  right  of  possession 
against  all  other  parties,  31he  has  a  right  of  possession  against 
the  owner,  even  after  demand,  until  the  debt  has  been  paid. 
If  the  debt  is  not  paid,  the  pledgee  may  foreclose  by  taking 
the  proper  steps. 

Foreclosure  of  a  pledge  may  be  "either  by  bringing  suit 
against  the  pledger,  or  by  sale,  of  the  property  without  judicial 
proceedings.  MWhen  it  is  impossible  to  make  demand  of  the 
amount  due  from  the  pledger,  the  foreclosure  must  be  by 
suit.  When  the  foreclosure  is  by  sale,  there  are  certain  steps 
which  must  be  strictly  observed.  **The  pledgee  must  make 
demand  of  the  pledger  of  the  amount  due,  after  it  has  become 
due.  A  demand  made  before  the  amount  is  due  would  be  in- 
effectual If  payment  is  refused,  notice  of  the  time  and  place 


98  BAILMENTS. 


of  sale  must  be  given,  and  the  article  must  then  be  sold  at 
public  auction  to  the  highest  bidder. 

The  pledgee  generally  has  a  right  only  to  hold  the  chattel, 
and  may  not  use  it  any  more  than  is  necessary  for  preserving 
its  integrity.  Thus  a  horse  may  be  reasonably  exercised,  or  a 
cow  milked;  but  the  pledgee  must  account  for  any  profit  which 
he  may  derive  from  this  use.  Where  the  pledgee  incurs  any 
necessary  expense  in  connection  with  the  article  bailed,  he  is 
entitled  to  reinbursement. 

DUTIES  OF  PLEDGEE.  The  pledgee  must  keep  the  article 
safely,  and  return  it  on  payment  of  the  debt.  He  must  ex- 
ercise ordinary  care  in  the  preservation  of  the  article;  and  for 
negligence  in  this  particular,  or  for  a  wrongful  use  of  the  chat- 
tel, he  is  liable  to  pay  damages.  The  pledgee  must  not  re- 
pledge  any  article  which  has  been  pledged  with  him. 

RIGHTS  AND  DUTIES  OF  PLEDGOR.  The  rights  and  du- 
ties corresponding  to  the  duties  and  rights  of  the  pledgee,  rest 
upon  the  pledger. 

HIRING.  There  are  several  different  classes  of  bailments 
of  hiring,  as  the  hiring  of  an  article  to  be  used  by  the  bailee, 
and  then  to  be  returned  by  him;  the  hiring  of  labor  or  services 
to  be  performed  by  the  bailee  upon  the  article  bailed,  which  is 
delivered  to  him  for  that  purpose;  or  the  hiring  of  custody  or 
transportation  of  the  article  bailed.  The  question  in  all  cases 
is  whether  an  article  has  been  delivered  by  one  person  to  an- 
other for  any  purpose  to  be  returned  to  that  person  upon  the 
completion  of  that  purpose. 

The  rights  and  duties  of  the  bailor  and  bailee  in  the  bail- 
ment of  hiring  are  25similar  to  the  rights  and  duties  in  the  case 
of  pledge,  and  it  is  not  necessary  to  repeat  them  here.  Where 
work  is  to  be  performed  upon  the  bailed  article,  and  it  is  done 
in  a  negligent  or  unskillful  manner,  the  bailor  may  refuse  to 
accept  it,  and  may  recover  for  damages.  If  he  accept,  however 
he  is  liable  to  pay  for  the  services  performed,  but  he  has  a 
counter  claim  for  the  damages  resulting  from  the  lack  of  skill 
or  care. 


BAILMENTS.  99 


Hotel  Keepers. — There  are  two  classes  of  bailees  upon 
whom,  as  a  mauer  of  public  policy,  special  duties  and  liabilities 
have  been  imposed.  These  are  hotel  keepers  and  common 
carriers. 

A  HOTEL  KEEPER  IS  MONE  WHO  KEEPS  A  PUBLIC  HOUSE  IN 
WHICH  TRAVELERS  ARE  FURNISHED  WITH  EVERYTHING  WHICH 
THEY  HAVE  OCCASION  FOR  WHILST  UPON  THE  WAY. 

Hoard  and  lodging  must  both  be  offered  to  the  transient 
passenger.  A  mere  restaurant  would  not  be  classed  as  a  hotel, 
and  a  restaurant  keeper  would  not  be  charged  with  the  liability 
of  a  hotel  keeper.  Nor  would  the  keeper  of  a  boarding-house, 
which  is  not  open  to  the  general  public,  be  subject  to  the  lia- 
oilities  of  a  hotel  keeper. 

The  hotel  keeper  27is  made  liable  as  an  insurer  of  the 
safety  of  the  baggage  of  any  guest,  from  everything;  but  an  act 
of  Ciod,  or  of  the  public  enemy,  or  the  fraud  or  negligence  of 
the  owner  of  the  property.  He  must  pay  for  any  loss,  whether 
it  resulted  from  his  negligence  or  not.  And  this  liability  ex- 
tends ^to  all  property  of  the  guests  which  he  may  receive. 
But  he  is  not  bound  to  receive  everything  which  the  guest 
may  ask  him  to.  He  is  bound  to  receive  29all  baggage  which  is 
reasonably  necessary  for  the  personal  use  or  convenience  of 
the  traveler,  but  anything  beyond  this  he  may  refuse. 

The  hotel  keeper  may  limit  his  liability  in  certain  ways. 
As  "where  he  keeps  a  fire-proof  safe  he  may  notify  all  guests 
that  he  will  not  be  responsible  for  money,  jewelry,  documents, 
or  other  articles  of  unusual  value  and  small  compass,  unless 
placed  in  such  safe.  When  such  notice  is  given,  he  is  liable 
4lonly  for  loss  resulting  from  his  own  negligence  or  that  of  his 
servants. 

As  a  hotel  keeper  offers  his  services  to  any  person  who 
may  ask  them,  he  cannot  refuse  to  receive  any  guest,  unless  he 
is  disorderly.  And  guests  would  include  Mall  persons  who 
apply  to  the  hotel  keeper  for  such  services. 

Common   Carriers. — A   COMMON   CARRIER   Is 


100  BAILMENTS. 


WHO  UNDERTAKES,  FOR  HIRE,  TO  TRANSPORT  THE  GOODS,  OF 
THOSE  WHO  CHOOSE  TO  EMPLOY  HIM,  FROM  PLACE  TO 
PLACE. 

Railroads,  oil  pipe  lines,  river  and  bay  steamers,  express 
companies,  and  draymen  in  cities  are  common  carriers.  Common 
carriers  are  either  of  goods  or  of  passengers. 

CARRIERS  OF  GOODS.  A  common  carrier  of  goods  must 
receive  all  goods  offered  to  him  for  transportation  on  his  route, 
provided  they  are  not  dangerous,  and  must  transport  them  with 
reasonable  diligence;  but  he  may  refuse  the  goods  unless  the 
freight  is  paid  in  advance.  He  may  not  discriminate  by  giving 
advantage  to  one  person  over  another,  as  to  time,  price  of  trans- 
portation, or  otherwise. 

34Common  carriers  are  liable  in  the  same  manner  as  hotel 
keepers  for  goods  placed  in  their  charge  for  transportation. 
He  must  take  extreme  care  of  such  goods;  but  35for  any  loss 
resulting  from  such  defect  inherent  in  the  article  itself,  or  for 
any  loss  which  care  and  foresight  could  not  possibly  have  guarded 
against,  he  is  not  liable. 

Where  goods  are  to  be  sent  beyond  the  line  of  the  com- 
mon carrier  36he  is  liable  for  any  loss  occurring  to  the  goods 
while  in  his  possession.  But  if  he  can  show  that  the  goods 
passed  out  of  his  control  into  that  of  some  responsible  carrier, 
he  is  not  liable. 

The  liability  of  a  common  carrier  as  imposed  by  law  cannot 
be  limited  by  general  notice  on  his  part,  but  may  be  37by  special 
contract.  Where  the  bill  of  lading  or  contract  of  carriage,  ex- 
presses 38any  conditions  as  to  the  rate  of  freight,  the  time,  place, 
and  manner  of  delivery,  and  the  amount  of  the  carriers  liability 
in  case  of  loss  or  injury,  the  acceptance  of  such  bill  of  lading 
by  the  owner  is  an  agreement  to  such  conditions.  Any  other 
conditions  39must  be  signed  by  the  owner  of  the  goods  to  be 
binding.  And  under  no  circumstances,  whether  by  agreement  or 
otherwise,  can  the  carrier  be  relieved  from  40liability  for  the 
negligence,  fraud,  or  willful  wrong  of  himself  or  of  his  serv- 
ants. 


BAILMENTS.  101 


CARRIERS  OF  PASSENGERS.  Carriers  of  passengers  ate  liable 
"only  to  the  extent  of  an  ordinary  compensated  Mifee  lof  in- 
juries to  passengers.  They  must  use  the  utmost  care  in  the 
transportation  of  such  passengers;  but  only  when  the  injury 
results  from  the  carrier's  negligence  is  he  liable.  Where  the 
negligence  of  the  passenger  is  a  contributing  or  proximate  cause 
of  the  injury,  the  carrier  is  responsible  only  in  case  of  willful 
negligence  on  his  part. 

A  carrier  of  passengers  is  bound  to  carry  "all  who  apply  for 
transportation,  and  must  provide  suitable  carriages  for  them. 
"He  may  insist  upon  the  payment  of  fare  at  starting  or  at  any 
subsequent  time,  and  may  enforce  reasonable  regulations.  "Any 
person  being  carried,  unless  stealing  a  ride,  is  a  passenger, 
whether  he  has  paid  his  fare  or  not,  and  is  entitled  to  all  rights 
and  privileges  as  such.  But  "any  passenger  refusing  to  pay  his 
fare,  or  to  comply  with  reasonable  regulations  of  the  carrier, 
may  be  ejected  at  any  regular  stopping  place,  or  near  any  dwel- 
ling house. 

A  ticket  "purchased  at  full  rates  is  good  for  passage  be- 
tween the  points  indicated  therein  or  to  or  from  any  intermediate 
station  at  any  time  within  six  months  from  the  date  of  the  pur- 
chase; but  a  ticket  sold  at  less  than  full  fare  may  be  limited  to 
a  shorter  time  and  without  stop-over  privileges. 

THE  "BAGGAGE  of  passengers  is  insured  in  the  same  manner 
as  the  baggage  of  the  guest  of  a  hotel.  But  "where  the  passen- 
ger keeps  his  baggage  in  his  own  possession,  the  liability  of  the 
carrier  is  that  of  an  ordinary  bailee.  The  carrier,  where  the 
vehicle  is  not  fitted  up  for  the  carriage  of  passengers  exclusively, 
must  carry,  without  compensation,  49one  hundred  pounds  of  bag- 
gage for  each  passenger.  But  a  stage  line  is  obliged  to  carry 
only  sixty  pounds  free. 


QUESTIONS. 


DEFINITION  AND  NATURE. 

1.  What  is  a  bailment  ? 

2.  Who  are  the  parties  to  a  bailment? 

3.  What  are  th<?  three  essentials  of  a  bailment? 

4.  What  are  the  two  classes  of  bailments  ? 

GRATUITOUS  BAILMENTS. 

5.  In  what  cases  d  .  gratuitous  bailments  of  the  first  class  arise? 

6.  What  owners,.  ,*  of  the  article  does  the  bailee  acquire? 

7.  For  what  injury  to  himself  may  the  bailee  recover  ? 

8.  If  the  article  is  liable  to  be  destroyed,  what  may  the  bailee  do? 

9.  What  is  the  first  duty  of  the  bailee  ? 

10.  What  is  the  result  of  a  neglect  or  refusal  to  inform  the  bailor  of 
injuries  to  the  chattel  ? 

11.  To  what  amount  is  the  bailee  liable  ? 

12.  Where  work  is  to  be  done  without  compensation,  when  may  the 
bailee  refuse  to  perform  ? 

13.  What  are  the  rights  and  duties  of  bailors  ? 

14.  When  an  article  is  used  in  a  manner  different  from  the  manner  in 
which  it  was  loaned  to  be  used,  what  is  the  liability  of  the  bailee  ? 

COMPENSATED   BAILMENTS. 

15.  What  are  compensated  bailments? 

16.  What  two  classes  are  there  ? 

17.  What  is  a  pledge  ? 

18.  Who  are  the  parties  to  a  pledge? 

19.  How  does  a  pledge  differ  from  a  mortgage  of  personal  property? 

20.  What  is  necessary  that  the  pledgee  may  enforce  this  claim  against 
the  property  ? 

21.  What  right  has  the  pledgee  in  addition  to  that  of  an  ordinary 
bailee? 

22.  How  may  a  pledge  b«  foreclosed  ? 

(102) 


QUESTIONS.  103 


23.  When  must  the  foreclosure  be  by  suit  ? 

24.  What  are  the  necessary  steps  in  a  foreclosure  by  sale  ? 

2$.  What  are  the  rights  and  duties  of  the  bailor  and  bailee  in  the 
bailment  of  hiring? 

HOTEL  KEEPERS. 

26.  Define  a  hotel  keeper. 

27.  What  is  the  liability  of  a  hotel  keeper? 

28.  To  what  property  does  this  extend  ? 

29 .  What  property  is  he  bound  to  receive  ? 
30    How  may  he  limit  his  liability  ? 

31.  What  is  his  liability  then? 

32.  Who  are  guests  ? 

COMMON  CARRIERS. 

33.  Define  a  common  carrier. 

34.  What  is  the  liability  of  common  carriers  ? 

35.  For  what  is  a  common  carrier  not  liable  ? 

36.  What  is  the  liability  of  a  common  carrier  where  goods  are  sent 
beyond  his  line? 

37.  How  may  his  liability  be  limited.? 

38.  What  conditions  may  be  imposed  by  the  bill  of  lading  ? 

39.  What  is  necessary  to  render  other  conditions  binding? 

40.  What  liability  cannot  be  evaded  ? 

41.  What  is  the  liability  of  a  carrier  of  passengers  ? 

42.  Who  must  he  carry  ? 

43.  What  conditions  may  he  make  as  to  payment  of  fare  ? 

44.  Who  are  passengers? 

45.  Who  may  be  put  off? 

46.  What  limitation  is  there  on  a  ticket  ? 

47.  What  is  the  liability  for  baggage  ? 

48.  When  is  it  not  insured  ? 

49.  How  much  baggage  must  be  carried  free  ? 


PART     4. 

CHAPTER  I. 

REAL   PROPERTY   CONTRACTS. 

Real  property,  or  real  estate,  stands  on  much  the  same 
footing  in  this  State  as  personal  property,  the  arbitrary  rules 
of  the  common  law  having  been  abolished  in  a  great  measure 
by  statutory  provisions. 

The  absolute  ownership  of  real  property  may  be  in  one 
person  unconditionally,  when  he  is  said  to  have  'a  fee  simple 
or  absolute  fee.  A  fee  simple  may  be  bought  and  sold  to  the 
same  extent  as  any  other  property.  The  absolute  title  may 
also  be  held  conditionally;  or  it  may  be  divided  among  several 
joint  owners,  or  owners  in  common,  when  it  is  subject  to  the 
rules  of  such  ownership  (see  page  10),  or  it  may  be  so  divided 
that  the  owners  shall  hold  at  different  times.  Where  one 
owner  of  the  property  has  it  for  a  limited  time,  as  from  month 
to  month,  or  from  year  to  year,  or  for  a  given  number  of 
months  or  years,  his  interest  is  a  leasehold,  and  the  instrument 
under  which  he  holds  is  a  lease. 

The  sale  of  real  property,  the  pledging  of  real  property  by 
mortgage,  and  the  leasing  of  real  property,  will  each  be  con- 
sidered separately. 

Sale  of  Real  Property. — A  transfer  of  real  property, 
or  an  agreement  for  such  transfer,  must  be  2in  writing.  The 
instrument  evidencing  a  sale  of  real  property  is  called  sa  deed. 
A  deed  must  contain  *the  names  of  the  parties,  a  description 
of  the  property,  and  words  of  transfer;  and  it  must  be  signed 
by  the  grantor,  or  by  his  agent.  When  a  deed  is  signed  by  the 

(104) 


REAL  PROPERTY  CONTRACTS.  105 

agent  for  the  grantor,  "the  name  of  the  grantor  must  be  signed 
with  that  of  the  agent  as  agent.  And  the  authority  of  such 
agent  must  be  "in  writing.  Where  the  name  of  the  grantor 
has  been  changed  during  his  ownership  of  the  property,  Tthat 
fact  must  be  recited  in  the  deed,  and  the  new  and  old  names  must 
both  appear. 

From  the  fact  of  conveyance  the  grantor  covenants,  with- 
out express  words,  to  that  effect,  that  he  has  not  previously 
conveyed  the  property,  and  that  it  is  free  from  incumbrances  of 
his  creation.  In  some  cases  a  covenant  of  warranty  is  also 
included,  undertaking  8to  indemnify  for  and  to  defend  against 
all  adverse  claims.  A  deed  in  which  such  a  clause  appears  is 
called  a  warranty  deed. 

After  a  deed  is  drawn  up  and  signed,  the  signature  of  the 
grantor  "should  be  acknowledged  before  some  officer  authorized 
by  law  to  -take  acknowledgments.  Usually  such  acknowledg- 
ments are  10made  before  a  notary  public  or  commissioner  of  deeds 
but  certain  other  officers  are  authorized  to  take  acknowledgments. 
The  officer  must  "be  satisfied  as  to  the  identity  of  the  party  mak- 
ing the  acknowledgment  and  he  must  thereupon  affix  his  cer- 
tificate and  seal.  A  married  woman  can  make  acknowledgment 
the  same  as  though  she  were  single.  The  acknowledgment  is 
not  necessary  to  the  validity  of  the  deed,  but  is  necessary  to 
entitle  it  to  be  recorded. 

In  order  to  pass  title  the  deed  must  be  delivered  to  the 
grantee,  or  his  authorized  agent,  with  the  intention  of  passing 
title  thereby.  Where  the  deed  is  stolen  or  delivered  by  accident 
"no  title  passes.  A  deed  may  be  delivered  to  a  third  party  to  hold 
until  a  certain  time,  or  until  the  performance  of  a  certain  condi- 
tion, and  then  to  be  delivered  to  the  grantee.  When  so  held,  the 
deed  is  called  an  escrow.  After  a  deed  has  once  been  delivered  the 


106  REAL  PROPERTY 


title  passes,  and  a  redelivery  to  the  grantor  would  not  defeat 
the  title.  For  such  a  purpose  a  14new  deed  signed  by  the  original 
grantee  would  be  necessary. 

Mortgages.  —  A  MORTGAGE  Is  15A  PLEDGE  OF  PROPERTY, 
WITHOUT  DELIVERY,  AS  SECURITY  FOR  THE  PERFORMANCE  OF 
SOME  ACT. 

A  mortgage  of  real  property  must  always  be  in  writing, 
and,  in  order  to  be  recorded,  must  be  acknowledged  in  the 
same  manner  as  a  deed.  It  may  be  in  the  form  of  a  contract, 
stating  the  terms  of  the  agreement,  or  it  may  be  in  the  form  of 
an  absolute  conveyance  of  the  property,  with  a  clause  to  the 
effect  that  on  the  performance  of  the  obligation  the  convey- 
ance shall  be  defeated  and  the  property  shall  revert  to  the 
original  owner.  This  clause  of  defeasance  may  even  be  con- 
tained in  a  separate  instrument;  but  in  such  a  case  when  the 
conveyance  is  recorded,  the  defeasance  must  also  be  recorded. 

The  effect  of  a  mortgage  is  16not  to  give  the  person  receiving 
it  a  title  to  the  property,  or  even  a  right  of  possession,  it  only 
gives  him  a  right  to  enforce  his  claim  against  the  property  in  case 
the  debt  is  not  paid,  or  the  obligation  not  performed  within  the 
time  limited  thereby.  This  claim  is  enforced  "by  means  of  a  suit 
of  foreclosure,  in  which  the  judgment  is  to  the  effect  that  the 
property  be  sold  and  the  proceeds  applied  to  the  discharge  of 
the  obligation.  Any  I8person  interested  in  the  property  sold  under 
foreclosure  may  redeem  it  within  one  year  by  paying  the  amount 
for  which  it  was  sold,  together  with  legal  interest  (7%)  and 
costs. 

If  the  property  does  not  sell  for  sufficient  to  discharge  the 
obligation,  judgment  can  be  entered  against  the  debtor  for  the 
deficiency.  A  mortgage  is  only  a  security  for  a  debt.  1MA  trust 
deed,  in  lieu  of  a  mortgage,  often  provides  for  sale  without  suit. 

An  assignment  of  a  mortgage  transfers  to  the  assignee  '"'all 
the  rights  of  the  mortgagee.  But  unless  notified  of  such  as- 
signment the  person  owing  the  debt  would  be  discharged  by 
paying  to  the  original  holder  of  the  mortgage. 


REAL  PROPERTY  CONTRACTS.  107 

When  the  debt,  to  secure  which  the  mortgage  was  given,  is 
paid,  '"the  person  holding  the  mortgage  must  execute  a  release,  or 
make  "an  entry  opposite  the  record  of  the  mortgage  in  the 
County  Recorder's  office  satisfying  the  same  of  record  and  wit- 
nessed by  the  Recorder. 

Recording. — MAny  instrument  or  judgment  affecting  the 
title  to  or  possession  of  real  property  may  be  recorded.  The 
effect  of  recording  is  24to  give  notice  to  all  persons  of  the  exist- 
ence of  such  instrument  or  judgment.  An  unrecorded  instru- 
ment is  valid  between  Mthe  parties  thereto  and  as  to  all  persons 
having  notice  of  it,  but  not  as  to  others.  An  instrument  is  re- 
corded 26by  being  deposited  with  the  recorder  of  the  county  in 
which  the  property  is  situated,  and  is  deemed  to  be  recorded  as 
soon  as  so  deposited. 

Leases.— A  LEASE  Is  "A  HIRING  OF  REAL  PROPERTY  FOR  A 
LIMITED  TERM. 

The  person  so  hiring  property  is  called  ^a  tenant;  the  owner 
of  the  property  becomes  wa  landlord.  As  the  lease  is  merely  a 
contract  by  which  the  use  of  the  property  is  granted  for  a  less 
time  than  the  owner  possesses  it,  the  continuation  of  the  lease  and 
the  other  terms  and  conditions  may  be  fixed  by  the  agreement.  A 
lease  may  be  from  week  to  week,  from  month  to  month,  or  from 
year  to  year.  But  when  a  lease  is  for  a  longer  period  than  one 
year  80it  must  be  evidenced  by  an  instrument  in  writing.  Where 
no  term  during  which  the  lease  is  to  continue  is  contained  in  the 
agreement,  "the  term  is  presumed  to  continue  for  such  length  of 
time  as  the  parties  have  adopted  for  the  computation  of  rent 
in  the  case  of  lodgings  or  dwelling  houses.  In  other  cases 
"the  lease  is  presumed  to  be  for  one  year.  If  the  tenant  re- 
mains in  possession  after  the  expiration  of  the  lease,  and  the 
landlord  receives  rent  from  him,  the  lease  is  presumed  to  be 


108          REAL  PROPERTY  CONTRACTS. 

renewed  on  the  same  terms.  33A  lease  of  land  for  agricultural 
purposes  cannot  be  created  for  a  longer  term  than  ten  years ; 
nor  can  a  lease  of  a  town  or  city  lot  continue  for  more  than 
fifty  years,  excepting  a  lot  belonging  to  a  municipality,  minor,  or 
incompetent,  which  can  only  be  leased  for  ten  years. 

A  lease  may  be  conditional,  as  in  the  case  of  other  con- 
tracts. Where  permission  is  given  to  break  a  condition,  34any 
future  breach  of  that  condition  cannot  be  punished.  But  a 
waiver  of  the  right  to  enforce  the  penalty  for  a  breach  of  con- 
dition, 85without  expressly  licensing  such  breach,  would  not 
have  such  effect. 

Where  the  building  leased  is  intended  for  the  occupation 
of  human  beings,  the  landlord  must  keep  it  in  a  condition  fit 
for  such  habitation.  And  36if  after  notice  of  such  needed  re- 
pairs, the  landlord  does  not  repair  within  a  reasonable  time, 
the  tenant  may  repair  at  the  expense  of  the  landlord  where  the 
cost  of  such  repairs  will  not  exceed  one  month's  rent,  or  he 
may  vacate  the  premises  and  thereby  terminate  the  lease.  All 
other  repairs,  and  also  such  repairs  as  are  necessary  to  make 
the  premises  habitable,  where  the  deterioration  i&  caused  by 
the  negligence  of  the  tenant,  must  be  made  by  the  tenant. 

"Where  the  landlord  does  any  act  of  a  permanent  char- 
acter, calculated  to  deprive  the  tenant  of  the  enjoyment  of  any 
part  of  the  leased  premises,  the  tenant  may  give  up  possession 
and  terminate  the  lease;  but,  if  he  do  not  give  up  possession, 
he  will  be  bound  to  pay  a  part  of  the  rent  in  proportion  to  the 
amount  of  the  premises,  the  enjoyment  of  which  he  has  re- 
tained. wWhere  the  tenant  is  deprived  of  enjoyment  of  the 
premises  by  a  stranger  having  a  superior  title  to  the  landlord, 
he  is  discharged  of  his  liability  for  rent;  if  the  deprivation  is  of 
a  part  of  the  premises  only,  he  is  discharged  pro  tanto. 

COVENANTS.  A  covenant  of  quiet  enjoyment  is  implied 
in  every  lease.  That  is,  39the  landlord  undertakes  to  protect 
the  tenant  against  all  persons  lawfully  claiming  the  land,  and 
that  if  turned  off  of  the  land  by  a  title  superior  to  that  of  the 
landlord,  the  tenant  will  be  relieved  from  the  payment  of  rent. 


REAL  PROPERTY  CONTRACTS.  109 

The  covenant  for  quiet  enjoyment  relates  only  to  *°the  title  to 
the  property,  and  not  to  the  possession,  and  the  landlord  is 
not  bound  to  put  the  tenant  in  possession  of  the  property  unless 
he  expressly  covenants  to  do  so. 

<'  ASSIGNMENT  AND  SUB-LEASE.  Unless  there  is  an  agree- 
ment to  the  contrary  in  the  lease,  the  tenant  may  sell  the 
whole  or  any  portion  of  his  right  to  the  use  of  the  premises. 
41  Where  the  whole  right  is  sold,  it  is  called  an  assignment  of 
the  lease,  and  the  purchaser  of  the  lease  must  pay  the  rent  to 
the  original  landlord  directly.  The  landlord  may  refuse  to 
receive  the  new  tenant,  in  which  case  the  former  tenant  would 
still  be  bound  to  pay  the  rent.  42Where  the  tenant  retains  any 
interest  in  the  lease,  as  a  right  of  collecting  rent,  etc.,  the 
agreement  is  called  a  sub-lease.  The  former  tenant  becomes 
a  landlord  of  the  new  tenant,  and  remains  bound  as  tenant  of 
the  owner  of  the  land. 

The  tenant  43may  occupy  the  buildings  on  the  leased 
premises,  take  the  annual  products  of  the  soil,  and  work  mines 
and  quarries  which  were  open  at  the  commencement  of  his 
tenancy.  Any  other  rights  must  be  expressly  granted  by  the 
lease. 

RIGHTS  OF  LANDLORD.  The  landlord  is  entitled  44to  re- 
ceive the  rent,  to  the  performance  of  the  conditions  of  the 
lease  by  the  tenant  and  to  the  possession  of  the  premises  at 
the  end  of  the  term  in  as  good  condition  as  they  were  at  the 
beginning,  reasonable  wear  and  tear  excepted.  The  landlord 
may  change  the  terms  of  any  lease  from  month  to  month,  by 
giving  notice  in  writing  of  at  least  thirty  days  of  such  change. 

When  a  tenant  continues  in  possession  of  the  premises 
without  the  consent  of  the  landlord  after  the  expiration  of  his 
lease,  either  by  lapse  of  time  or  by  the  breach  of  covenant  or 
condition,  45he  may,  by  taking  the  proper  steps,  be  ejected  by 
suit.  Where  the  breach  is  by  non-payment  of  rent,  a  notice 
must  be  served  upon  the  tenant,  at  any  time  within  one  year, 
requesting  the  payment  of  the  rent,  stating  the  amount  due,  and 
demanding  possession  in  default  of  payment  within  three  days. 


110  REAL  PROPERTY  CONTRACTS. 

In  case  of  the  breach  of  any  other  covenant  or  condition  by 
the  tenant,  the  landlord  must  serve  a  like  notice  on  the  tenant 
where  the  covenant  or  condition  is  possible  of  performance. 
Where  it  is  impossible,  notice  is  excused.  The  breach  of  the 
covenant  or  agreement  may  be  cured  by  a  performance  within 
the  three  days.  The  notice  must  be  served  by  delivering  a 
copy  of  it  to  the  tenant  personally;  or,  if  he  be  absent  from 
his  place  of  residence,  and  from  his  usual  place  of  business, 
the  notice  must  be  served  by  leaving  a  copy  with  some  person 
of  suitable  age  and  discretion  at  either  place,  and  sending  a 
copy  through  the  mail  addressed  to  the  tenant,  at  his  place  of 
residence;  or,  if  such  place  of  residence  and  business  cannot 
be  ascertained,  or  a  person  of  suitable  age  or  discretion  there 
cannot  be  found,  then,  by  affixing  a  copy  in  a  conspicuous 
place  on  the  property,  and  also  delivering  a  copy  to  a  person 
there  residing,  if  such  person  can  be  found,  and  also  sending 
a  copy  through  the  mail  addressed  to  the  tenant  at  the  place 
where  the  property  is  situated. 

FIXTURES.  A  question  which  frequently  arises  between 
landlord  and  tenant,  at  the  conclusion  of  the  lease  is,  What 
improvements  put  upon  the  premises  by  the  tenant  may  be  re- 
moved by  him?  "Those  things  which  are  affixed  to  the  land  in 
such  manner  that  they  may  not  be  removed  by  the  tenant  at  the 
end  of  his  term,  are  called  fixtures. 

The  general  rule  is  that  "such  things  as  are  affixed  to  the 
land  for  the  purposes  of  trade,  manufacture,  ornament,  or  domes- 
tic use,  may  be  removed,  if  the  removal  can  be  effected  without  in- 
jury to  the  premises.  ^After  the  term  of  the  lease  has  expired, 
nothing  attached  to  the  land  in  any  way  can  be  removed 
without  the  permission  of  the  landlord.  If  the  property  is 
resting  upon  the  land  and  not  affixed  to  it,  *'it  may  be  removed; 
but  "anything  which  is  imbedded  in  the  land,  as  in  the  case 
of  walls,  attached  by  roots  to  it,  permanently  resting  upon  it, 
as  buildings,  or  permanently  attached  to  what  is  thus  perma- 
nent, as  by  means  of  cement,  nails,  etc.,  is  presumed  to  be 
affixed  to  it. 


QUESTIONS. 


1.  What   is  the  estate  in   real  property  called  where  one  persoa 
holds  it  unconditionally  ? 

SALE  OF  REAL  PROPERTY. 

2.  How  must  a  transfer  of  real  property  be  evidenced  ? 

3.  What  is  such  a  writing  called  ? 

4.  What  must  a  deed  contain  ? 

5.  How  must  the  signature  be,  when  made  by  the  agent  ? 

6.  How  must  the  authority  of  the  agent  be  evidenced  ? 

7.  When  the  name  of  the  grantor  has  been  changed,  what  must  be 
done  ? 

8.  What  is  the  undertaking  of  a  covenant  of  warranty  ? 

9.  What  must  be  done  after  the  deed  is  drawn  up  and  signed  ? 

10.  How  is  a  deed  acknowledged  ? 

11.  What  does  the  officer  do? 

12.  How  is  a  married  woman's  acknowledgment  taken? 

13.  What  is  the  effect  where  a  deed  is  stolen  or  delivered  by  accident? 

14.  What  is  necessary  to  defeat  a  title  after  the  deed  has  been  deliv« 
ered  t 

MORTGAGES. 

15.  What  is  a  mortgage? 

16.  What  is  the  effect  of  a  mortgage  ? 

17.  How  is  this  claim  enforced  ? 

1 8.  What  time  has  the  owner  for  redemption  ? 

19.  What  power  is  sometimes  given  in  the  mortgage  ? 

20.  What  rights  does  the  purchaser  of  a  mortgage  acquire? 

21.  What  must  be  done  when  the  mortgage  is  paid  ? 

22.  What  would  be  a  sufficient  release  ? 

RECORDING. 

23.  What  may  be  recorded  ? 

24.  What  is  the  effect  of  recording? 

25.  As  to  whom  is  an  unrecorded  instrument  valid? 

26.  How  is  an  instrument  recorded  ? 

(Ill) 


112  QUESTIONS. 


LEASES. 

27.  What  is  a  lease  ? 

28.  What  is  the  person  hiring  the  property  called  ? 

29.  What  is  the  owner  called  ? 

30.  What  is  necessary  where  a  lease  is  for  a  longer  period  than  one 
ytar  ? 

3 1 .  Where  no  term  is  expressed  what  is  the  rule  ? 

32.  What  is  the  rule  in  other  cases? 

33.  For  how  long  a  term  may  a  lease  be  created  ? 

34.  What  is  the  effect  of  permission  to  break  a  condition? 

35.  What  is  the  effect  of  a  waiver  of  the  right  to  enforce  the  penalty? 

36.  \\  hen  may  the  tenant  give  up  possession  ? 

37.  In  what  other  case? 

38.  What   is  the   effect  of  a  deprivation   of   the  enjoyment   by  a 
stranger  ? 

39.  What  is  a  covenant  of  quiet  enjoyment? 

40.  What  does  this  covenant  relate  to? 

41.  What  is  an  assignment? 
42    What  is  a  sub-lease  ? 

43.  What  are  the  rights  of  a  tenant  ? 

44.  To  what  is  the  landlord  entitled  ? 

45.  What  may  be  done  when  the  tenant  holds  over  after  the  lease 
has  expired? 

46.  What  are  fixtures? 

47.  What  is  the  general  rule  ? 

48.  When  does  this  right  cease? 

49.  What    may  be  done  if  the  property  is  resting  upon  land  and 
not  affixed  to  it  ? 

50.  What  property  is  presumed  to  be  affixed  to  land  ? 


CHAPTER  II 

LIENS. 

Definition  and  Nature. — A  LIEN  Is  *A  CHARGE  IMPOSED 
UPON  SPECIFIC  PROPERTY  IN  SOME  MODE  OTHER  THAN 
BY  TRANSFER,  BY  WHICH  IT  Is  MADE  SECURITY  FOR  THE 
PERFORMANCE  OF  SOME  ACT. 

A  lien  gives  no  title  to  the  property,  and  the  holder  of  a 
lien  on  any  property  has  only  2a  right  to  enforce  his  claim 
against  that  property,  by  taking  the  proper  steps,  and  selling  it. 
Any  'agreement  to  the  contrary  by  which  the  property  is  to  be 
forfeited  in  satisfaction  of  the  lien,  and  all  contracts  restrain- 
ing the  right  of  redemption  of  the  property  after  sale,  are  void. 

Liens  are  either  4Equitable  or  Common  Law  Liens.  The 
latter  depend  5upon  the  possession  of  the  property  by  the 
holder  of  the  lien,  and  as  soon  as  he  loses  possession,  the  lien 
is  lost.  To  Equitable  liens  possession  is  not  necessary. 
They  exist  irrespective  of  the  right  of  possession,  and,  in  fact, 
possession  would  in  most  cases  be  impossible.  There  are  also 
certain  liens  which  are  created  solely  by  statute,  as  the  mechan- 
ic's lien,  and  in  these  the  provisions  of  the  statute  must  be 
strictly  followed. 

COMMON  LAW  LIENS.  The  most  general  cases  of  Com- 
mon Law  Liens  are  the  7liens  of  all  bailees  for  com- 
pensation due  them  in  connection  with  the  bailment;  as  the 
lien  of  the  pledgee  on  the  pledged  goods,  of  the  hotel  keeper 
on  the  baggage  of  the  guest,  a  bailee  performing  work  on  the 
bailed  chattel,  etc.  A  seller  of  personal  property  has  8a  lien 
on  such  property  for  the  price,  until  they  have  passed  out  of 
his  possession.  A  finder  of  goods,  or  a  rescuer  of  goods  from 
(ie-nu<-tion  has  a  Hen  on  such  goods  'for  his  necessary  ex- 
penses in  connection  therewith, 
a  is;  o 


114  LIENS. 


The  sellers  lien  on  personal  property  sold  is,  "when  the 
buyer  becomes  insolvent  and  stops  paying  his  debts,  extended 
by  the  right  of  stoppage  in  transitu.  Stoppage  in  transitu  is 
"the  right  which  the  seller  has  to  retake  the  goods  and  renew 
his  lien  thereon  at  any  time  while  they  are  in  transit  to  the 
buyer,  but  before  they  have  reached  him  and  passed  into  his 
control.  This  right  exists  only  in  the  case  of  the  insolvency 
of  the  buyer;  in  other  cases  the  possession  of  the  carrier  is 
presumed  to  be  the  possession  of  the  buyer,  and  delivery  to 
him  places  the  goods  beyond  the  control  of  the  seller.  The 
elifect  of  such  stoppage  is  12not  to  rescind  the  contract,  or  to 
revest  the  title  to  the  property  in  the  seller,  but  only  to  renew 
his  lien  on  the  goods.  Where  there  is  a  delivery  of  possession 
of  a  part  of  the  goods  to  the  buyer,  with  the  intention  of  de- 
livering the  balance  "the  right  of  stoppage  is  defeated,  and  the 
seller  cannot  retake  the  balance.  But  an  attachment  by  the 
creditors  of  the  buyer,  while  the  goods  are  in  the  possession  of 
the  carrier,  would  not  defeat  the  right  of  stoppage.  The  right 
is  exercised  "by  giving  notice  to  the  person  having  possession  of 
the  goods,  that  such  right  exists  and  that  the  seller  intends  to 
exercise  it. 

The  liens  above  given  are  special  liens,  and  the  right  to 
enforce  them  does  not  extend  beyond  the  specific  act  as  a 
security  for  the  performance  of  which  the  goods  were  charged. 
There  are  also  general  liens  "which  extend  to  all  goods  in  the 
possession  of  the  holder,  and  cover  all  the  obligations,  or  all  the 
obligations  of  a  particular  class,  which  exist  in  favor  of  the  holder 
and  against  the  owner  of  the  property.  Such  are  16the  liens  of  the 
commission  merchant  on  the  property  in  his  possession  as  security 
for  his  advances,  expenses,  and  commissions;  and  the  lien  of  the 
banker  on  the  securities  of  his  customer,  for  the  general  balance 
due. 

EQUITABLE  LIENS.  As  already  stated,  equitable  lien*  do 
not  require  possession  of  the  property.  Equitable  liens  may 


LIENS.  115 


be  created  "by  express  Contract,  as  in  the  case  of  a  mortgage  of 
real  or  personal  property;  or  by  implied  contract,  as  where  one 
joint  owner  of  property  makes  expenditures  for  the  benefit  of 
that  property,  he  has  a  lien  on  the  interests  of  the  other  joint 
owners  for  the  payment  of  their  portion  of  the  indebtedness. 
A  grantor  of  real  property,  "where  the  price  is  paid  only  in 
part,  has  a  lien  on  the  property  for  the  payment  of  the  balance 
of  the  purchase  price.  "Where  the  grantor  receives  security 
in  addition  to  the  personal  liability  of  the  grantee,  the  lien  is  pre- 
sumed to  be  waived,  unless  Mit  is  expressly  reserved  in  the  deed 
transferring  the  property.  A  very  similar  lien  to  this  is  the 
vendor's  lien  which  "arises  before  the  property  has  been  con- 
veyed, while  the  grantor's  lien  does  not  arise  until  after  convey. 
ance.  The  vendor's  lien  arises  where  an  agreement  has  been 
entered  into  to  convey  land  on  the  payment  of  the  price  in 
installments.  The  conveyance  is  not  made  until  the  pay- 
ment of  the  last  installment,  but  possession  is  given  immedi- 
ately. The  "vendor  has  a  lien  on  the  property  for  the  unpaid 
portion  of  the  purchase  money. 

CHATTEL  MORTGAGES.  Mortgages  of  personal  property 
can  be  made  only  upon  the  following  classes  of  property,  viz.: 
Locomotives,  engines  and  other  rolling  stock  of  a  railroad; 
steamboat  machinery,  the  machinery  used  by  machinists, 
foundrymen,  and  mechanics;  steam  engines  and  boilers; 
mining  machinery;  printing  presses  and  material;  professional 
libraries;  instruments  of  surveyors,  physicians,  or  dentists;  up- 
holstery, furniture  and  household  goods;  oil  paintings,  pictures, 
and  works  of  art;  all  growing  crops,  including  grapes  and  fruit; 
vessels  of  more  than  five  tons  burden;  instruments,  negatives, 
furniture  and  fixtures  of  a  photograph  gallery;  the  machinery, 
casks,  pipes,  tubes  and  utensils  used  in  the  manufacture  or 
storage  of  wine,  fruit  brandy,  fruit  syrups,  or  sugar;  also  wines, 
fruit  brandy,  fruit  syrup,  or  sugar,  with  the  cooperage  in  which 
the  same  are  contained;  pianos  and  organs;  iron  and  steel 
safes;  cattle,  horses,  mules,  swine,  sheep,  and  goats,  and  the 


116  LIENS. 


increase  thereof;  harvesters,  threshing  outfits,  hay  presses, 
wagons,  farming  implements,  and  the  equipment  of  a  livery 
stable,  including  buggies,  carriages,  harness,  and  robes;  abstract 
systems,  books,  maps,  papers,  and  slips  of  searchers  of  records; 
raisins  and  dried  fruits,  cured  or  in  process  of  being  cured,  also 
all  boxes,  fruit  graders,  drying  trays,  and  fruit  ladders ;  bees  and 
bee-hives,  apiaries  and  apiary  stock,  including  frames,  combs,  ex- 
tractors, also  honey  at  apiaries ;  machinery,  tanks,  stills,  agitators, 
leachers,  and  apparatus  used  in  producing  and  refining  petroleum, 
asphaltum,  fuel  oils,  lubricating  oils  and  greases;  the  bedroom 
furniture,  carpets,  tables,  stoves,  ranges,  cooking  utensils  and 
all  furniture  and  equipments  usually  found  in  a  hotel,  all  machin- 
ery used  in  the  sawing  and  production  of  lumber,  or  the  manu- 
facture of  lumber  into  lumber  products,  also  wagons,  logging 
trucks,  donkey  engines,  and  cables,  chains  and  stretchers,  and 
all  tools  and  appliances  used  in  the  manufacture  of  lumber;  all 
furniture,  bars  and  appurtenances  of  saloons.  Any  other  personal 
property  may  be  pledged,  but  not  mortgaged.  ^A  pledge  requires 
a  transfer  of  possession ;  a  mortgage  does  not. 

Mortgages  of  personal  property  other  than  that  mentioned 
above  are  valid  between  the  parties  thereto,  their  heirs  and  rep- 
resentatives and  persons  who,  before  parting  with  value,  had  actual 
notice  thereof.  A  pledge  of  personal  property  differs  from  a 
mortgage  in  that  the  pledgee  takes  possession  of  the  pledged 
property. 

A  chattel  mortgage  must  be  in  writing  and  must  be  ac- 
companied by  ^affidavits  of  all  the  parties  thereto,  to  the  effect 
^that  the  mortgage  is  made  in  good  faith  and  not  for  the  pur- 
pose of  hindering,  delaying,  or  defrauding  creditors.  It  must 
be  acknowledged  and  recorded  in  the  same  manner  with  mort- 
gages of  real  property.  A  chattel  mortgage  must  be  recorded 
Min  the  county  where  the  owner  of  the  property  lives,  and  also 
in  the  county  where  the  property  is  situated.  When  property 
subject  to  a  chattel  mortgage  is  removed  from  the  county  in 


LIENS.  H7 

which  it  was  situated  at  the  time  when  the  mortgage  was  created, 
"the  mortgage  must  be  recorded  in  the  county  into  which  the 
property  has  been  moved,  or  the  holder  must  take  the  property 
and  dispose  of  it  as  if  the  mortgage  were  due.  Such  action  must 
be  taken  within  thirty  days  after  the  time  of  such  removal.  A 
chattel  mortgage  if  not  paid  when  due  ""may  be  foreclosed  by  suit 
or  may  be  sold  in  the  same  manner  as  pledged  property.  (See 
P.  97.) 

REDEMPTION  OF  LIENS.  wAny  person  having  an  interest  in 
property  subject  to  a  lien  may,  80after  it  is  due  and  before  fore- 
closure, redeem  the  lien.  Redemption  must  be  81by  performing 
the  act  to  secure  the  performance  of  which  the  lien  was  crated, 
and  by  compensating  for  the  delay,  if  any  damages  have  been 
suffered  thereby. 

The  person  redeeming  from  a  lien,  other  than  the  owner 
of  the  property,  "succeeds  to  the  rights  of  the  former  holder,  and 
may  enforce  the  lien  against  the  property. 


QUESTIONS. 


DEFINITION    AND    NATURE. 

1.  What  is  a  lien? 

2.  What  is  the  interest  of  the  holder  of  a  lien  in  the  property? 

3.  What  agreements  are  void? 

4.  What  are  the  two  classes  of  liens? 

5.  Upon  what  do  Common  Law  liens  depend? 

6.  Is  possession  necessary  in  Equitable  liens? 

COMMON   LAW    LIENS. 

7.  What  are  the  most  general  cases  of  Common  Law  liens? 

8.  What  lien  has  a  seller  of  personal  property? 

9.  For  what  has  a  finder  or  rescuer  of  goods  a  lien? 

10.  When  is  the  seller's  lien  extended? 

11.  What  is  the  right  of  stoppage  in  transitu? 

12.  What  is  the  effect  of  such  stoppage? 

13.  What  is  the  effect  of  a  part  delivery? 

14.  How  is  the  right  exercised? 

15.  What  are  general  liens? 

16.  What  are  examples  of  such  liens? 

EQUITABLE   LIENS. 

17.  How  may  equitable  liens  be  created? 

18.  What  is  a  grantor's  lien? 

19.  When  is  the  lien  presumed  to  be  waived? 

20.  In  what  case  is  such  lien  not  waived  by  such  act? 

21.  When  does  the  vendor's  lien  arise? 

22.  What  is  the  vendor's  lien? 

CHATTEL    MORTGAGES. 

23.  How  does  a  pledge  differ  from  a  mortgage? 

24.  What  must  a  chattel  mortgage  be  accompanied  by? 

25.  What  must  appear  by  such  affidavits? 

26.  Where  must  it  be  recorded  ?• 

27.  What  is  the  effect  of  removing  the  property  from  the  county  ? 
23.  How  may  the  chattel  mortgage  be  enforced? 

REDEMPTION    OF   LIEN. 

29.  Who  may  redeem  a  lien? 

30.  When  may  a  l:cn  be  redeemed? 

31.  How  must  a  lien  be  redeemed? 

32  What  are  the  rights  of  the  person  redeeming? 


CHAPTER  III. 

WILLS. 

Definition  and  Nature. — A  WILL  Is  *A  DISPOSITION  or 
PROPERTY,  MADE  IN  ANTICIPATION  OF  DEATH,  AND  TO  TAKR 
EFFECT  AFTER  DEATH. 

The  person  leaving  a  will  at  his  death  is  called  aa  testator ;. 
'the  person  named  in  the  will  to  settle  the  estate  is  called  the 
executor;  and  the  property  disposed  of  is  called  4a  devise, 
bequest,  or  legacy. 

Who  may  make  a  will. — 'Any  person,  male  or  female, 
of  sufficient  mind,  and  over  the  age  of  eighteen  years,  can  make 
a  will.  A  married  woman  may  make  a  will  of  her  separate 
property,  without  the  consent  of  her  husband,  in  the  same 
manner  as  if  she  were  single.  The  community  property  on  the 
death  of  the  wife  6becomes  the  property  of  the  husband,  and 
cannot  be  disposed  of  by  her  by  will.  On  the  death  of  the 
husband  7one-half  of  the  community  property  becomes  the 
property  of  the  wife,  the  other  half  may  be  disposed  of  by  the 
husband  by  will. 

Idiots  and  insane  people  during  the  continuance  of  the 
insanity,  cannot  make  wills;  but  8if  it  can  be  shown  that  the 
will  of  an  insane  person  was  made  during  a  lucid  interval,  it 
would  be  valid.  As  to  how  much  mental  capacity  is  necessary, 
'the  person  making  a  will  should  have  sufficient  mind  to  com- 
prehend the  act  which  he  is  performing,  and  to  be  able  to 
enumerate  without  prompting  the  list  of  his  property  and  the 
names  of  those  having  claims  upon  him.  If  he  cannot  do  this 
he  cannot  dispose  of  his  property  in  a  just  manner.  Undue 
influence,  or  fraud,  such  as  to  make  the  act  more  the  offspring 
of  another's  mind  than  of  the  testator's,  would  invalidate  a  wilL 


120  WILLS. 


But  any  argument  or  advice,  or  any  feeling  of  affection  or 
gratitude  short  of  this,  would  not  affect  the  validity  of  a  will. 

How  a  will  may  be  made. — The  code  permits  three 
kinds  of  wills:  18The  Ordinary  Will,  the  Holographic  Will,  and 
the  Nuncupative  Will. 

THE  ORDINARY  WILL.  The  ordinary  will  may  be  in 
writing  or  printing,  and  it  may  be  written  or  printed  by  any 
person.  In  its  execution,  however,  there  are  four  steps  to  be 
taken,  and  the  provisions  on  this  subject  must  be  strictly  fol- 
lowed. These  steps  are:  "(i)  the  signature,  (2)  the  acknowl- 
edgment, (3)  the  publication,  and  (4)  the  witnessing.  Sign- 
ing must  be  by  "the  testator  either  personally  or  by  a  third 
person  writing  his  name  at  his  request  and  in  his  presence. 
When  the  signing  is  by  such  third  person,  13the  name  of  the 
third  person  must  also  appear  as  a  witness.  The  acknowledg- 
ment is  14an  acknowledgment  to  the  witnesses  by  the  testator 
that  the  signature  is  his  own.  15If  the  witnesses  are  present 
and  see  the  signing  by  the  testator,  such  acknowledgment  is 
not  necessary.  Publication  is  18a  declaration  by  the  testator 
that  the  instrument  is  his  will,  made  to  the  witnesses.  This  is 
a  separate  and  distinct  act  from  the  acknowledgment.  There 
must  be  I7at  least  two  witnesses,  who  shall  sign  their  names  as 
such  witnesses,  18at  the  end  of  the  will,  in  the  presence  of  the 
testator,  but  it  is  not  necessary  that  they  should  sign  in  the 
presence  of  each  other.  The  witnesses  must  act  as  such  lsat 
the  request  of  the  testator.  The  signature  of  a  witness  must 
be  written  by  himself  personally.  Bequests  to  the  witness  of 
a  will  are  void,  unless  29there  are  sufficient  witnesses  besides  to 
prove  the  will. 

HOLOGRAPHIC  WILLS.  A  holographic  will  is  "one  written, 
dated,  and  signed  entirely  by  the  testator.  If  any  portion  is 
printed,  even  the  date,  or  if  any  part  is  written  by  a  person 
other  than  the  testator,  it  is  void.  Holographic  wills  "do  not 
require  to  be  witnessed,  and  therefore  acknowledgment  and 
publication  are  also  unnecessary.  They  are  valid  in  the  courts 
of  this  Stale,  whether  made  in  the  State  or  out. 


WILLS.  121 


NUNCUPATIVE  WILLS.  Nuncupative  wills  are  unwritten. 
They  are  allowed  in  only  two  cases,  and  in  these  cases  on  ac- 
count of  the  extreme  emergency.  "Persons  who  at  the  time 
of  making  them  have  been  in  expectat  ion  of  immediate  death, 
resulting  from  an  injury  received  the  same  day;  and  persons 
in  actual  military  service  in  the  field,  or  doing  duty  on  ship- 
board at  sea,  and  in  actual  fear  or  peril  of  death,  may  make  a 
nuncupative  will.  The  property  bequeathed  by  such  a  will 
"may  be  real  or  personal,  but  in  no  case  may  it  exceed  one 
thousand  dollars  in  value.  ( 

A  nuncupative  will  must  be  witnessed  by  *two  persons 
who  were  present  at  the  time  of  the  making,  and  one  of  whom 
must  have  been  requested  to  act  as  such  witness  by  the  testa- 
tor at  the  time.  The  will  must  be  reduced  to  writing  26within 
thirty  days  after  the  words  were  spoken,  and  presented  to  the 
court  for  probate  27not  less  than  fourteen  days  after  the  death  of 
the  testator,  nor  more  than  six  months  after  the  words  were 
spoken. 

CODICILS.  A  codicil  is  wan  addition  to,  or  qualification 
of  a  person's  will,  added  after  the  execution  of  the  original 
will.  The  codicil  need  not  be  attached  to  the  will;  it  may  be 
on  a  separate  paper,  but  it  must  be  executed  with  the  same 
formalities  as  are  required  in  the  original  will. 

Revocation. — A  will  may  be  revoked  29by  burning,  tear- 
ing, cancellation,  etc.,  when  it  is  done  with  the  intention  of 
revoking;  but  a  will  so  destroyed  on  the  supposition  that  a 
subsequent  one  is  valid,  would  be  held  to  be  not  revoked,  if  such 
supposition  proved  to  be  untrue.  A  revocation  must  be  **by 
the  testator  personally,  or  by  some  person  in  his  presence  and  by 
his  direction.  And  such  direction  must  be  proved  by  two  wit- 
nesses. When  the  destruction  is  induced  by  undue  influence, 
"a  copy  of  the  will  may  be  admitted  to  probate  on  proving  it  a 
true  copy. 

Making  82a  subsequent  will  does  not  revoke  a  prior  one, 
unless  the  former  contains  provisions  inconsistent  with  the 


IL*2  WILLS. 


latter,  or  there  is  an  express  revocation.  It  is  a  usual  custom 
to  put  a  clause  at  the  end  of  a  will  expressly  revoking  all  former 
wills.  Where  the  former  will  is  not  revoked,  the  later  one  is 
treated  as  a  codical,  intended  to  supply  deficiencies  in  the  first. 
The  destruction  of  a  later  will  "does  not  revive  a  former  one 
unless  it  expressly  appears  by  the  terms  of  the  revocation  that 
such  was  the  intention,  or  unless  the  former  will  is  duly  repub- 
lished  after  such  destruction. 

A  marriage  and  birth  of  issue  after  the  due  publication  of 
a  will,  is  held  to  revoke  such  will,  ^when  the  wife  or  children 
survive,  unless,  after  marriage,  provision  has  been  made  for 
such  wife  and  children,  or  they  are  so  mentioned  in  the  will  as 
to  show  an  intention  to  exclude  them.  The  will  of  a  single 
woman  "is  absolutely  revoked  by  her  marriage,  and  must  be 
republished  after  such  marriage  in  order  to  be  valid. 

Legacies  and  Devises. — A  LEGACY  Is  86A  GIFT  OF 
PERSONAL  PROPERTY  BY  WILL.  A  DEVISE  Is  WA  GIFT  OF 
REAL  PROPERTY  BY  WILL. 

A  bequest  is  a  gift  of  real  or  personal  property  by  will. 
The  person  to  whom  a  gift  of  personal  property  is  made  by 
will  is  called  a  legatee;  a  devisee  is  one  receiving  a  gift  of  real 
propci  ty  by  will.  MAny  private  individual  may  be  a  legatee  or 
devisee,  but  '"a  corporation  cannot  take  property  by  will  with- 
out express  authorization  by  statute.  "Scientific,  literary  and 
educational  corporations  are  excepted  from  this,  and  may  take 
by  will. 

No  gift  by  will  can  be  made  to  charitable  uses,  or  to  a 
charitable  institution,  unless  the  will  was  made  at  least  thirty 
days  before  the  testator's  death.  And  when  made  thirty  days 
before  testator's  death,  the  bequest  must  not  exceed  one-third 
of  the  testator's  estate  after  all  just  debts  have  been  paid, 
where  he  leaves  legal  heirs. 

•'If  the  testator  omits  in  his  will  to  provide  for  any  of  his 
children,  or  the  issue  of  any  deceased  children,  such  child 
or  ch.ldren  would  be  entitled  to  the  same  share  it  would  have 


WILLS.  123 


if  he  had  died  without  making  a  will,  unless  an  intention  tc 
exclude  such  child  appeared  42by  express  words  to  that  effect' 
in  the  will. 

Whether  a  person  leave  a  will  or  not,  the  estate  must  be 
administered  by  the  probate  court,  and  any  person  having  the 
will  of  a  deceased  person  must  present  the  same  at  the  court 
for  probate  within  thirty  days  after  receiving  notice  of  the 
death  of  the  testator 


QUESTIONS. 


I-  Define  a  will? 

2.  What  is  the  person  leaving  a  will  called  ? 

3.  Who  is  the  executor  ? 

4.  What  is  the  property  disposed  of  called  ? 

WHO  MAY  MAKE  A  WILL. 

5.  Who  may  make  a  will? 

6.  What  becomes  of  the  community  property  on  the  death  of  tht 
wife? 

7.  On  the  death  of  the  husband  ? 

8.  When  may  the  will  of  an  insane  person  be  valid  ? 

9.  How  much  mental  capacity  is  necessary  ? 

HOW  A  WILL  MAY  BE  MADS. 

10.  What  are  the  three  kinds  of  wills  ? 

11.  What  four  steps  are  necessary  to  be  taken? 

12.  Who  must  sign? 

13.  What  is  necessary  when  the  signing  is  by  a  third  person? 

14.  What  is  the  acknowledgment  ? 

15.  When  is  it  unnecessary? 

16.  What  is  publication  ? 

17.  How  many  witnesses  must  there  be  ? 

18.  How  shall  they  sign? 

19.  At  whose  request  must  they  act? 

.20.  When  are  bequests  to  witnesses  valid  ? 

21.  What  is  a  holographic  will  ? 

22.  What  is  the  peculiarity  of  such  wills  ? 

23.  Who  may  make  a  nuncupative  will  ? 
24  What  property  may  be  bequeathed  ? 

25.  How  many  witnesses  are  required? 

26.  Within  what  time  must  the  will  be  reduced  to  writing  ? 

27.  When  must  it  be  presented  for  probate? 

28.  \\      i  is  a  codicil? 


QUESTIONS.  125- 


REVOCATION. 

29.  How  may  a  will  be  revoked? 

30.  By  whom  must  the  revocation  be  ? 

31.  What  may  be  done  when  revocation  is  induced  by  undue  influence? 

32.  What  is  the  effect  of  a  subsequent  will  ? 

33.  What  is  the  effect  of  destroying  a  later  will  ? 

34.  When  does  a  sub.M-quent   marriage  and  birth  of  issue  revoke  ft 
prior  will  ? 

35.  What  is  the  effort  of  marriage  on  the  will  of  a  single  woman- 

LEGACIES  AND   OEVIbttS. 

36.  Define  a  legacy. 

37.  A  deviue. 

38.  Who  may  be  legatees  ? 

39.  Who  may  not  ? 

40.  What  corporations  are  excepted  ? 

41.  When  any  child  is  omitted  from  a  will  what  is  the  effect? 

42.  How  must  an  intention  to  exclude  appear  ? 


APPENDIX  OF  FORMS. 


A  few  documents  are  here  inserted  to  illustrate  some  of  the  most 
common  transactions  relating  to  transfers  of  property  and  to  the  securing  of 
debts.  These  forms  have  been  carefully  prepared  for  use  in  the  Pacific 
States  and  Territories,  and  are  in  accord  with  the  statutes  of  California, 
as  presented  in  the  codes.  Some  caution  must  be  observed  in  their  use, 
the  peculiar  circumstances  of  a  particular  case  often  requiring  the  use  of  a 
somewhat  different  instrument  from  any  of  those  given  below.  This  is,  of 
course,  especially  the  case  in  regard  to  wills;  and  the  wills  hereinbelow 
given  are  presented,  not  so  much  as  forms  or  guides  for  the  composition  of 
other  wills,  as  to  exhibit  the  practical  application  of  the  principles  set 
forth  in  the  preceding  pages,  as  to  the  proper  method  of  executing  and 
attesting  wills  in  this  State.  No  forms  are  given  for  certificates  of  ac- 
knowledgment, as  these  can  readily  be  obtained  from  the  officer  taking 
the  acknowledgment. 

Matter  inclosed  in  brackets  [thus]  in  the  following  fo»ms  does  not 
constitute  a  part  of  the  instrument,  but  is  inserted  to  indicate  where 
omitted  matter  is  to  be  supplied,  or  for  the  purpose  of  illustrating  the 
changes  required  to  adapt  the  document  to  a  somewhat  different  use. 

RECEIPTS. 

A  «^eipt  is  an  acknowledgment  that  a  sum  of  money,  or  other  value, 
has  bc*i,o  received.  It  may  be  in  one  word,  as  when  under  a  bill  the 
seller  writes  the  word  "paid"  and  signs  it.  The  words  "received  pay- 
ment," however,  are  more  frequently  used  in  receipting  a  bill. 

A  receipt,  though  strong  evidence,  is  not  conclusive;  and  the  law 
permits  error  or  fraud  in  its  execution  to  be  shown. 

Receipts  may  be  for  a  specified  debt;  on  account;  in  full;  or  for  a  special 
purpose — an  example  of  each  of  which  is  given  below.  A  receipt  in  full 
may  be  "in  full  of  all  accounts,"  which  affects  only  claims  that  are  prop- 
erly matters  of  account;  or  "in  full  of  all  demands,"  which  prevents  any 
further  claim  whatever,  unless  some  serious  or  excusable  mistake  can  be 
sbown. 


j.s  AND  NOTES.  127 


It  is  advisable  always  to  take  receipts  when  any  payments  of  impor- 
tance are  made.  They  should  be  kept  in  a  place  where  they  are  safe,  a.id 
easy  of  access.  Good  accountants  are  known  by  the  care  with  which 
they  arrange  and  file  their  vouchers,  so  as  to  have  them  immediately  avail- 
able for  reference. 

Receipt  for  a  Specified  Debt, 

SAN  FRANCISCO,  October  i,  1886. 

Received  from  John  Smith  the  sum  of  one  hundred  and  twenty 
Dollars,  being  full  amount  of  salary  due  me  as  bookkeeper  up  to  date. 

THOS.  A.  WILLIS. 

Receipt  on  Account. 

SAN  FRANCISCO,  Oct.  i,  1886. 

Received  of  John  Smith  two  hundred  and  fifty  dollars  on  account. 

JOHN  JONES  &  Co. 

Receipt  in  Full. 

SAN  FRANCISCO,  October  i,  1886. 

Received  from  John  Smith  the  sum  of  one  thousand  dollars,  being 
in  full  payment  and  settlement  of  all  my  claims  and  demands  against  him, 
to  date.  JOHN  JONES. 

Receipt  for  a  Special  Purpose. 

SAN  FRANCISCO,  Oct.  i,  1886. 

Received  from  John  Smith  three  hundred  dollars  to  be  used  in  pur- 
chasing for  him  a  single-footing  saddle  horse.  HENRY  HALL. 

DUE-BILLS   AND    NON-NEGOTIABLE    NOTES. 

A  due-bill  is  simply  an  acknowledgment  of  debt  in  writing.  1  .ii 
includes  also  non-negotiable  notes,  i.  e.,  those  payable  to  a  certain  person 
only^  and  notes  payable  in  other  articles  than  money.  Such  instrumei.ts 
are  binding  between  the  parties,  and  may  be  assigned  by  endorsement; 
but  they  are  not  negotiable  in  the  usual  meaning  of  that  term.  Suit  must 
be  brought  on  them  in  the  name  of  the  holder,  but  the  maker  can  set  up 
in  defense  any  good  offset  against  the  payee,  that  existed  before  he  re- 
ceived notice  of  the  assignment.  We  give  below  forms  of  due-bills  and 
non-negotiable  notes,  but  do  not  recommend  their  use.  Where  the  con- 
sideration is  money,  a  promissory  note  payable  to  order  or  bearer  should 
always  be  used. 

Due-Bill  for  Money. 

$100.  SAN  FRANCibCO,  Cal.t  Dec.  i,  1886. 

Due  John  Jones  on  demand,  for  value  received,  one  hundred  dollar*. 

TOHN  SMITH, 


128  NEGOTIABLE  INSTRUMENTS. 

Due-Bill  Payable  in  Merchandise. 

$100. 

Dne  John  Jones  one  hundred  dollars,  payable  in  merchandise  from 
my  store.  JOHN  SMITH. 

San  Francisco,  Dec.  I,  1886. 

Non-Negotiable  Note. 

$500.  SAN  FRANCISCO,  Dec.  i,  1886. 

Sixty  days  after  date,  I  promise  to  pay  to  John  Jones  five  hundred 
dollars.  Value  received.  JOHN  SMITH. 

NEGOTIABLE  INSTRUMENTS. 

Valuable  information  regarding  this  class  of  instruments  may  be  had 
by  referring  to  pages  81-90,  inclusive.  Inland  bills  of  exchange — those 
drawn  and  payable  within  the  State — are  usually  termed  DRAFTS,  and  are 
so  designated  below.  Bank  checks  are  usually  classed  among  inland  bills. 
Foreign  bills  of  exchange — all  bills  drawn  or  payable  outside  of  the  State 
— are  the  only  instruments  required  by  the  statutes  of  California  to  be  pro- 
tested for  non-payment  by  a  notary  public,  although  it  is  the  custom  with 
most  banks  to  protest  all  negotiable  paper  when  dishonored.  Due  notice 
of  dishonor,  however,  must  in  all  cases  be  given  to  the  drawer  of  a  bill 
or  the  indorsers  of  a  note,  unless  such  instrument  has  been  previously 
indorsed,  "notice  and  presentment  waived." 

The  words,  "  value  received,"  are  customary  in  negotiable  instruments, 
/at  are  not  essential,  and  may  be  omitted  without  affecting  their  legal 
status. 

A  note  founded  on  fraud,  or  where  the  consideration  is  illegal,  is  void 
between  the  parties.  So  also  is  a  note  issued  as  a  gift,  since  it  lacks  con- 
sideration. Any  material  alteration  in  a  note,  for  instance,  in  date,  amount, 
or  time  of  payment,  discharges  all  parties  who  have  not  consented  to  such 
alteration. 

If  a  negotiable  instrument  falls  due  on  Sunday,  or  a  legal  holiday, 
then  it  becomes  payable  on  the  following  day. 

If  a  note  be  given  by  a  person  who  cannot  write,  and  who  signs  by 
mark,  it  is  required  by  the  codes  of  California  to  be  signed  by  some 
one  as  witness,  who  must  also  write  the  maker's  name  near  the  mark. 

If  no  time  be  fixed  in  the  note  for  its  payment,  it  becomes  payable  on 
demand;  if  made  payable  to  a  fictitious  person,  it  is  payable  to  bearer. 

The  amount  of  a  negotiable  instrument  should  always  be  written  out 
in  words.  It  is  usually  expressed  in  both  words  and  figures.  When  the 
sum  in  figures  differs  from  that  expressed  in  words,  the  latter  is  taken  as 
the  amount  of  the  instrument. 


BILLS  OF  EXCHANGE.  129 

It  is  still  the  custom,  in  drawing  notes  in  this  State,  to  use  the  words, 
"gold  coin  of  the  United  States;"  but,  having  no  longer  their  former 
importance,  they  may  be  omitted,  if  desired. 

Days  of  grace  are  not  allowed  by  the  statutes  of  California. 

Sight  Draft. 

$1,000.  SAN  FRANCISCO,  Jan.  10,  1887. 

At  sight,  pay  to  John  Jones,  or  order,  one  thousand  dollars,  and 
charge  the  same  to  my  account.  JOHN  SMITH. 

To  JAMES  JOHNSON,  Oakland,  Cal. 

Time  Drafts. 

$1,000.  SAN  FRANCISCO,  Jan.  15,  1887. 

Thirty  days  after  sight,  pay  to  the  ®rder  of  John  Jones  one  thousand 
dollars,  value  received,  and  charge  the  same  to  the  account  of 

To  HENRY  HALL,  414  California  Street.  JOHN  SMITH. 

$»  ,000.  SAN  FRANCISCO,  Jan.  20,  1887. 

Sixty  days  after  date,  pay  to  John  Jones,  or  order,  one  thousand 
d(  liars,  and  charge  to  the  account  of  JOHN  SMITH. 

To  JAMES  JOHNSON,  Oakland,  Cal. 

Bank  Check. 
ND.  148.  SAN  FRANCISCO,  Jan.  2,  1887. 

OT 

Pay  to  John  Jones  &  Co or  order, 

One  thousand  five  hundred  and  twenty-five Dollars. 

$1,525.  JOHN  SMITH. 

Bill  of  Exchange. 

$1,000.  SAN  FRANCISCO,  October  i,  1886. 

Ten  days  after  sight,  pay  to  John  Smith,  or  order,  the  sum  of  one 
thousand  dollars,  in  current  funds,  and  charge  the  same  to  the  account  of 

To  WM.  E.  DAVIS,  New  York.  JOHN  JONES. 

A  Set  of  Bills  of  Exchange. 

WELLS,  FARGO  &  Co.,  BANKING  OFFICE, 
No.  947.     Ex.  for  $750.  SAN  FRANCISCO,  Cal.,  Jan.  8,  1887. 

At  sight  of  this  first  of  exchange  (second  and  third  unpaid},  pay  to 
the  order  of  John  Smith,  seven  hundred  and  fifty  dollars,  value  re- 
ceived, and  charge  the  same  to  the  account  of 

WELLS,  FARGO  &  Co. 
To  JONES  BROS.,  Bankers,  New  York. 
0 


130  NEGOTIABLE  INSTRUMENTS. 

WELLS,  FARGO  &  Co.,  BANKING  OFFICE, 
No.  947.     Ex.  for  $750.  SAN  FRANCISCO,  Cal.,  Jan.  8,  1887. 

At  sight  of  this  second  of  exchange  (first  and  third  unpaid],  pay  to 
the  order  of  John  Smith,  seven  hundred  and  fifty  dollars,  value  re- 
ceived, and  charge  the  same  to  the  account  of 

WELLS,  FARGO  &  Co. 
To  JONES  BROS.,  Bankers,  New  York. 

WELLS,  FARGO  &  Co.,  BANKING  OFFICE, 
No.  947.     Ex.  lor  $750.  SAN  FRANCISCO,  Cal.,  Jan.  8,  1887. 

At  sight  of  this  third  of  exchange  (first  and  second  unpaid},  pay  to  the 
order  of  John  Smith,  seven  hundred  and  fifty  dollars,  value  received, 
and  charge  the  same  to  the  account  of  WELLS,  FARGO  &  Co. 

To  JONES  BROS.,  Bankers,  New  York. 

Promissory  Note. 

[SIMPLE  INTEREST.] 

$10,000.  SAN  FRANCISCO,  Cal.,  October  i,  1886. 

Two  years  after  date  I  promise  to  pay  to  the  order  of  John  Jones  the 
sum  of  ten  thousand  dollars,  gold  coin  of  the  United  States,  with 
interest  thereon,  in  like  gold  coin,  from  date  until  paid,  at  the  rate  of  six 
per  cent  per  annum,  value  received.  JOHN  SMITH. 

Promissory  Note. 

[With  privilege  of  payment  before  maturity.] 

$10,000.  SAN  FRANCISCO,  Cal.,  October  i,  1886. 

On  or  before  the  first  day  of  October,  1888,  I  promise  to  pay  to  the 
order  of  John  Jones  the  sum  of  ten  thousand  dollars,  gold  coin  of  the 
United  States,  with  interest  thereon,  in  like  gold  coin,  from  date  until 
paid,  at  the  rate  of  six  per  cent  per  annum,  for  value  received. 

JOHN  SMITH. 
Promissory  Note. 

[PAYABLE  BY  INSTALLMENTS.] 

$10,000.  SAN  FRANCISCO,  Cal.,  October  i,  1886. 

For  value  received,  I  promise  to  pay  to  the  order  of  John  Jones  the  sum 
of  ten  thousand  dollars,  payable  in  installments  as  follows,  viz. :  One  thou- 
sand dollars  on  the  first  day  of  December,  1886,  and  one  thousand  dollars 
on  the  first  day  of  each  succeeding  month  thereafter,  until  the  whole 
amount  shall  have  been  paid;  together  with  interest  on  the  monthly  de- 
creasing balance  of  said  principal  sum  at  the  rate  of  one  per  cent  per 
month,  payable  monthly.  Principal  and  interest  payable  only  in  United 
States  gold  coin.  JOHN  SMITH. 

Promissory   Note. 

[COMPOUND  INTEREST  MONTHLY.] 

$10,000.  SAN  FRANCISCO,  Cal.,  October  i,  1886. 

Two  years  after  date,  for  value  received,  I  promise  to  pay  to  the 
order  of  John  Jones,  the  sum  of  ten  thousand  dollars,  gold  coin  of  the 
United  States,  with  interest  thereon  from  date  until  paid,  at  the  rate  of 
six  per  cent  per  annum,  payable  semi -annually,  in  like  gold  coin.  And, 


PROMISSOR  Y  NO  TES.  1 31 

<n  case  default  be  made  in  the  payment  of  any  installment  of  interest  when 
due  and  payable,  the  same  shall  thereupon  be  added  to  the  principal  sum 
and  become  a  part  thereof,  and  shall  thereafter  bear  interest  and  be  <v::i- 
founded  monthly  at  the  same  rate.  JOHN  SMITH. 

Joint  and  Several  Note. 

$1,000.  SAN  FRANCISCO,  Cal.,  October  i,  1886. 

Six  months  after  date,  for  value  received,  we  jointly  and  severally 
promise  to  pay  to  the  order  of  John  Smith,  the  sum  of  one  thousand 
dollars,  gold  coin  of  the  United  States,  with  interest  thereon  in  like  gold 
coin,  from  date  until  paid,  at  the  rate  of  eight  per  cent  per  annum. 

JOHN  JONES, 
CHARLES  A.  GREEN. 

Collateral  Note. 

$1,000.  SAN  FRANCISCO,  Cal.,  Oct.  i,  1886. 

Sixty  days  after  date,  I  promise  to  pay  to  the  order  of  John  Jones, 
at  the  Bank  of  California,  the  sum  of  one  thousand  dollars,  for  value  re- 
ceived, with  interest  from  date  until  paid  at  the  rate  of  one  per  cent  per 
month,  payable  monthly  in  advance;  and,  if  not  so  paid,  to  be  com- 
pounded and  become  part  of  the  principal,  bearing  thereafter  the  same 
rate  ot  interest. 

I  hereby  deposit,  as  collateral  security  for  the  payment  of  the  above 
note,  fifty  shares  ($100  each)  of  the  Hercules  Gold  and  Silver  Mining  Com- 
pany, and  I  hereby  appoint  and  constitute  said  John  Jones,  his  heirs  and 
assigns,  my  attorney  irrevocable,  with  power  of  substitution,  to  sell  with- 
out notice  to  me  the  whole  or  any  part  of  said  security,  either  at  public 
or  private  sale,  the  proceeds  to  be  applied  to  the  payment  of  the  above 
note,  interest  due,  and  expenses  of  sale,  in  case  of  non-payment  of  said 
note  when  due;  any  surplus,  after  payment  of  said  note,  interest,  and 
expenses,  to  be  subject  to  my  order.  But  in  case  of  the  payment  of  above 
note  and  interest,  according  to  the  terms  of  the  former,  then  this  agree- 
ment to  be  void,  and  the  above-named  security  to  be  returned  to  me. 

JOHN  SMITH. 

Forms  of  Indorsement  of  Notes,  etc. 

[SEE  PAGE  82.] 
/.     Indorsement  in  blank. 

JOHN  SMITH. 
a.    Indorsement  in  full. 

Pay  to  the  order  of  John  Jones. 

JOHN  SMITH. 

3,     Restrictive  Indorsement. 

Pay  to  John  Jones  only. 

JOHN  SMITH. 

4+     Blank  Indorsement  without  liability. 

Without  recourse  on  me. 

JOHN  SMITH. 


132  NEGOTIABLE  INSTRUMENTS, 

j.     Indorsement  in  full  without  liability. 

Pay  to  the  order  of  John  Jones,  without  recourse-on  me. 

JOHN  SMITH. 

6.     Indorsement  -with  Waiver  of  Notice. 

Presentment,  protest,  and  notice  of  dishonor  are  waived. 

JOHN  SMITH. 

Protest  of  Bill,  or  Note. 

[SEE  PAGE  87.] 

STATE  OF  CALIFORNIA,  1 

City  and  County  of  San  Francisco,      / 

BE  IT  KNOWN,  that  on  the  twelfth  day  of  January,  in  the  year  ol 
our  Lord  one  thousand  eight  hundred  and  eighty-seven,  at  the  request  of 
John  Smith,  the  holder  of  the  annexed  bill  of  exchange  [or  promissory 
note},  I,  William  Green,  a  notary  public,  duly  commissioned  and  sworn, 
residing  in  the  said  city  and  county  of  San  Francisco,  did  present  said 
bill  of  exchange  [or  promissory  note]  at  the  office  of  John  Jones,  in  said 
city  of  San  Francisco,  where  the  same  is  made  payable,  and  demanded 
payment  thereof,  and  payment  was  refused,  "having  no  funds." 

Whereupon  I,  the  said  notary,  at  the  request  aforesaid,  did  protest, 
and  by  these  presents  do  publicly  protest,  as  well  against  the  drawer, 
acceptor  [or  maker},  and  indorser,  as  against  all  others  whom  it  does  or 
may  concern,  for  exchange,  re-exchange,  and  all  costs,  damages,  charges, 
and  interest  already  incurred  and  to  be  hereafter  incurred,  for  the  non- 
payment of  said  bill  of  exchange  [or  promissory  note}. 

And  I  do  hereby  certify,  that  on  the  twelfth  day  of  January,  1887, 
notice  in  writing  of  protest,  demand,  and  non-payment  of  the  above- 
mentioned  bill  of  exchange  [or  promissory  note}  was  served  upon  John 
Doe,  the  drawer  [or  maker},  by  depositing  the  same,  post-paid,  in  the 
post-office  in  said  city,  addressed  to  him  at  Virginia  City,  State  of  Nevada, 
his  reputed  place  of  business  and  residence,  and  upon  John  Jones,  the 
•acceptor  [or  indorser}  thereof,  by  handing  the  same  to  him  personally,  in 
said  city  of  San  Francisco. 

Thus  done  and  protested,  in  the  said  city  and  county  of  San  Fran- 
cisco, the  days  and  years  above  written.  WILLIAM  GREEN, 
[SEAL.]  Notary  Public. 

Notice  of  Protest. 

SAN  FRANCISCO,  Jan.  12,  1887. 

SIR:  Please  take?notice  that  a  certain  bill  of  exchange,  dated  Decem- 
ber 13,  1886,  for  the  sum  of  one  thousand  dollars,  payable  thirty  days 
after  date,  drawn  by  you  in  favor  of  John  Smith  and  accepted  by  John 
Jones,  was  this  day  presented  by  me,  a  notary  public,  to  said  John  Jones, 
the  acceptor  of  said  bill  of  exchange,  and  payment  therefor  demanded, 
which  was  refused;  and  the  said  bill  of  exchange  having  been  dishonored, 
the  same  was  this  day  protested  by  me  for  non-payment,  and  the  holder 
looks  to  you  for  the  payment  thereof,  together  with  all  costs,  charges, 


BONDS.  133 


interest,  expenses,  and  damages  already  accrued,  or  that  may  hereafter 
accrue  thereon  by  reason  of  the  non-payment  of  said  bill  of  exchange. 
Yours,  etc.,  WILLIAM  GREEN, 

Notary  Public. 
To  JOHN  DOE,  ESQ.,  Virginia  City,  Nev. 

Notice  of  Dishonor  (to  Indorser  of  Note). 

[Without  protest.] 

SAN  FRANCISCO,  October  i,  1886. 
THOS.  K.  ROSE,  ESQ.  : — 

Sir — Please  take   notice  that  a  promissory 

note  for  $1,000  and  interest,  made  by  John  Smith,  payable  to  order 
of  John  Jones,  dated  at  this  city  January  i,  1886,  and  endorsed  by  you, 
was  this  day  presented  by  me  to  said  John  Smith  for  payment,  and  that 
payment  thereof  was  refused;  also  that  I  am  the  holder  and  owner  of 
said  note,  and  that  I  look  to  you  for  payment  thereof. 

Yours  truly,  THOS.  C.  GREEN. 

BONDS. 

A  bond  is  the  acknowledgment  of  a  debt,  duty,  or  obligation;  and 
it  is  immaterial  what  mode  of  expression  is  used,  provided  the  language 
be  sufficient  to  establish  an  acknowledgment  of  debt.  A  bond  without  a 
condition,  is  called  a  single  one;  but  a  condition  is  generally  added  which 
makes  the  obligation  void  if  the  act  be  performed,  but  leaves  it  otherwise  in 
full  force.  The  penalty  in  a  bond  conditioned  on  the  payment  of  money 
is  usually  double  the  obligation,  in  order  to  cover  interest,  costs,  and 
damages.  Bonds  in  this  State  are  not  required  to  be  under  seal. 

Common  Bond,  with  Condition. 

KNOW  ALL  MEN  BY  THESE  PRESENTS,  that  I,  John  Smith, 
of  the  city  and  county  of  San  Francisco,  State  of  California,  am  held  and 
firmly  bound  unto  John  Jones,  of  the  place  aforesaid,  in  the  sum  of  two 
thousand  dollars,  lawful  money  of  the  United  States,  to  be  paid  to  the 
said  John  Jones,  his  executors,  administrators  and  assigns;  to  which  pay- 
ment, well  and  truly  to  be  made,  I  bind  myself,  my  heirs,  executors,  and 
administrators  firmly  by  these  presents. 

Dated  the  fifteenth  day  of  November,  one  thousand  eight  hundred 
and  eighty-six. 

The  condition  of  this  obligation  is  such  that  if  the  above  bounden 
John  Smith,  his  heirs,  executors,  or  administrators,  shall  well  and  truly 
pay,  or  cause  to  be  paid,  unto  the  above-named  John  Jones,  his  executors, 
administrators,  or  assigns,  the  sum  of  one  thousand  dollars  and  interest, 
on  or  before  the  first  day  of  July,  1887,  then  the  above  obligation  to  be 
void;  otherwise  to  remain  in  full  force  and  virtue.  JOHN  SMITH. 

Signed  and  delivered  in  the 
presence  of 

WILLIAM  GREEN. 


134  BONDS. 


Bond  of  Indemnity  on  Paying  Lost  Note. 

KNOW  ALL  MEN,  etc.  [as  in  common  bond  to  the  condition,  and  then 
add]-.— 

The  condition  of  this  obligation  is  such,  that  whereas  the  said  John 
Jones,  on  the  first  day  of  October,  1886,  did  make,  execute,  and  deliver 
unto  the  above  bounden  John  Smith,  for  a  valuable  consideration,  his 
promissory  note,  for  the  sum  of  one  thousand  dollars,  due  and  payable  one 
month  from  date  with  interest,  which  said  note  the  said  John  Smith,  since 
the  delivering  of  the  same  to  him  as  aforesaid,  has  in  some  manner  to  him 
unknown  lost  out  of  his  possession;  and  whereas  the  said  John  Jones  has 
this  day  paid  the  said  sum  according  to  the  tenor  of  said  note,  the  receipt 
whereof  the  said  John  Smith  does  hereby  acknowledge  in  full  satisfaction 
and  discharge  of  aforesaid  note,  promising  to  indemnify  and  save  harmless 
the  said  John  Jones  in  the  premises,  and  to  deliver  up  to  him  to  be  can- 
celed the  said  note  when  found :  Now,  therefore,  if  the  above  bounden 
John  Smith,  his  heirs,  executors,  or  administrators,  shall  at  all  times  here- 
after save  and  keep  harmless  the  said  John  Jones,  his  heirs,  executors,  and 
administrators,  of,  from,  and  against  the  promissory  note  aforesaid,  and 
of  and  from  all  costs,  damages,  and  expenses  that  shall  or  may  arise  there- 
from; and  also  deliver,  or  cause  to  be  delivered  up,  the  said  note  when 
found,  to  be  canceled,  then  this  obligation  shall  be  void,  otherwise  to 
remain  in  full  force  and  effect.  JOHN  SMITH. 

Signed,  etc.  [as  in  common  bond.} 

Bond  for  a  Deed  of  Land. 

KNOW  ALL  MEN,  etc.  [as  in  common  bond  to  the  condition.} 
The  condition  of  this  obligation  is  such  that  if  the  said  John  Smith, 
upon  the  payment  of  one  thousand  dollars  and  interest  by  said  John  Jones 
on  or  before  the  fifteenth  day  of  May,  one  thousand  eight  hundred  and 
eighty-seven,  in  accordance  with  a  certain  promissory  note  of  even  date 
herewith,  shall  convey  to  said  John  Jones  and  his  heirs  forever,  by  a  good 
and  sufficient  deed  giving  a  clear  title  free  from  all  incumbrances,  a  certain 
parcel  or  lot  of  land  situated  in  the  city  and  county  of  San  Francisco  and 
described  as  follows,  to  wit: — 

[Here  insert  description.] 

and  in  the  meantime  shall  permit  the  said  John  Jones  to  occupy  said 
premises  for  his  own  use;  then  this  obligation  shall  be  null  and  void, 
otherwise  to  remain  in  full  force  and  virtue. 

IN  TESTIMONY  WHEREOF  I  have  hereunto  set  my  hand,  the 
day  and  year  first  above  written.  JOHN  SMITH. 

Signed  and  delivered  in 
presence  of 

WILLIAM  GREEN. 
[  This  bond  should  also  be  duly  acknowledged  before  a  Notary  Public.] 

Bond  of  an  Officer  of  a  Corporation. 

KNOW  ALL  MEN  BY  THESE  PRESENTS,  that  we,  Henry  Hall 
as  principal,  and  John  Jones  and  John  Smith  as  sureties,  all  of  the  city 
and  county  of  San  Franicsco,  State  of  California,  are  held  and  firmly 
bound  unto  the  Land  Improvement  Company,  a  corporation  doing  business 
at  the  place  aforesaid,  in  (he  sum  of  ten  thousand  dollars,  to  be  paid  to 


BONDS.  135 


the  said  Land  Improvement  Company,  or  assigns;  to  which  payment, 
well  and  truly  to  be  made,  we  jointly  and  severally  bind  ourselves,  our 
heirs,  executors,  and  administrators  firmly  by  these  presents. 

Dated  the  first  day  of  February,  one  thousand  eight  hundred  and 
eighty-seven. 

The  condition  of  this  obligation  is  such,  that  whereas  the  above- 
named  Henry  Hall  has  been  elected  treasurer  [or  secretary]  of  the  afore- 
said Land  Improvement  Company,  by  reason  whereof,  and  as  such  treas- 
urer [or  secretary^  he  will  receive  into  his  possession  divers  sums  of 
money  and  other  things,  the  property  of  said  company;  and  is  required  to 
keep  true  and  accurate  accounts  of  said  property,  and  of  his  receipts  and 
disbursements  for  and  on  account  of  said  company: 

Now,  therefore,  if  the  said  Henry  Hall  shall  well  and  truly  perform 
all  and  singular  the  duties  of  treasurer  [or  secretary]  of  said  company  ac- 
cording to  the  provisions  of  its  by-laws,  for  and  during  his  official  term, 
and  until  he  shall  deliver  all  the  property  which  he  may  receive  as  such 
treasurer  [or  secretary]  to  his  successor  in  said  office,  or  to  such  other 
person  as  the  said  company  or  its  authorized  officers  may  direct;  and  shall 
keep  true  and  just  accounts  of  all  property  belonging  to  said  company 
that  may  come  to  his  hands;  and  shall  exhibit  and  submit  to  the  said 
company,  or  to  the  persons  by  them  thereunto  appointed,  his  said  accounts 
and  the  vouchers  therefor,  whenever  he  shall  be  so  requested;  and  shall 
at  the  expiration  of  his  term  of  office,  by  any  cause  whatever,  deliver  up 
to  his  successor  in  office  all  the  property  of  the  said  company  that  raay  be 
found  to  remain  in  his  hands,  and  his  books  of  account,  and  the  vouchers 
thereunto  belonging — then  this  obligation  shall  be  null  and  void;  other- 
wise to  remain  in  full  force  and  virtue.  HENRY  HALL, 

JOHN  JONES, 
JOHN  SMITH. 

Signed  and  delivered  in  the 
presence  of 

WILLIAM  GREEN, 
CHARLES  WILSON. 

Bond  of  an  Employe. 

KNOW  ALL  MEN  BY  THESE  PRESENTS,  that  we,  John  Smith, 
of  San  Francisco,  State  of  California,  as  principal,  and  James  Johnson 
and  Richard  Roe,  of  Oakland,  State  aforesaid,  as  sureties,  are  held  and 
firmly  bound  unto  John  Jones,  of  the  place  first  above  mentioned,  in  the 
sum  of  five  thousand  dollars,  to  be  paid  to  the  said  John  Jones,  his 
executors,  administrators,  or  assigns;  for  which  payment,  well  and  truly 
to  be  made,  we  jointly  and  severally  bind  ourselves,  our  heirs,  executors, 
and  administrators  firmly  by  these  presents.  Dated  the  tenth  day  of  Janu- 
ary, one  thousand  eight  hundred  and  eighty-seven. 

The  condition  of  the  above  obligation  is  such  that,  whereas  the  said 
John  Smith  has  been  employed  by  the  aforesaid  John  Jones  as  a  book- 
keeper [or  clerk  or  cashier]  in  his  business  of  general  shipping  and  com- 
mission: Now,  if  the  said  John  Smith  shall  well  and  faithfully  discharge 
his  duties  as  such  bookkeeper  [or  clerk,  etc.],  and  also  shall  account  for^all 
moneys  and  property  and  other  things  which  may  come  into  his  possession 
or  under  his  control  as  such  bookkeeper  [or  clerk,  etc.];  then  the  above 
obligation  to  be  void,  otherwise  to  remain  in  full  force  and  effect. 
Signed,  etc.  [as  in  abavt  bond  to  corporation.} 


136  REAL  PROPERTY  CONTRACTS. 

REAL  PROPERTY  CONTRACTS. 

This  includes  all  instruments  relating  to  real  estate.  For  information 
regarding  this  class  of  property,  see  pages  104-110.  Deeds  should  be 
signed,  witnessed,  acknowledged,  delivered,  and  recorded.  In  most  of  the 
States  the  law  requires  that  they  shall  be  sealed  also;  but  in  California 
that  is  not  required  in  any  instrument  signed  by  an  individual.  We  have 
therefore  omitted  the  seal  in  all  instruments,  such  as  Deeds,  Leases, 
Mortgages,  Bonds,  Contracts,  Powers  of  Attorney,  etc.  If  these  forms 
are  used  in  any  State  where  a  seal  is  required,  it  will  only  be  necessary 
to  write,  "Witness  my  hand  and  seal,  etc.,"  and  place  a  seal,  or  a  circle 
of  ink  called  a  seal,  after  the  signature.  In  this  State  the  only  instruments 
where  a  seal  is  required  by  law  are  the  certificates  of  a  notary  public, 
instruments  executed  by  a  corporation,  and  certain  documents  of  the 
Courts. 

Grant,  Bargain,  and  Sale  Deed. 

THIS  INDENTURE,  made  the  first  day  of  October,  in  the  year 
eighteen  hundred  and  eighty-six,  between  John  Smith,  of  the  city  and 
county  of  San  Francisco,  State  of  California,  the  party  of  the  first  pait, 
and  John  Jones,  of  the  county  of  Alameda,  State  aforesaid,  the  party  of 
the  second  part, 

WITNESSETH,  That  the  said  party  of  the  first  part,  for  and  in  consid- 
eration of  the  sum  of  ten  dollars,  in  gold  coin  of  the  United  States  of 
America,  to  him  in  hand  paid  by  the  said  party  of  the  second  part,  the 
receipt  whereof  is  hereby  acknowledged,  has  granted,  bargained,  and 
sold,  conveyed  and  confirmed,  and  by  these  presents  does  grant,  bargain, 
and  sell,  convey  and  confirm,  unto  the  said  party  of  the  second  part, 
and  to  his  heirs  and  assigns  forever,  all  that  certain  lot,  piece,  parcel,  or 
tract  of  land  situated  and  being  in  the  city  and  county  of  San  Francisco, 
State  of  California,  and  bounded  and  particularly  described  as  follow  », 
namely: — 

[Here  describe  property.] 

Together  with  all  and  singular,  the  tenements,  hereditaments  and 
appurtenances  thereunto  belonging,  or  in  anywise  appertaining,  and  the 
reversion  and  reversions,  remainder  and  remainders,  rents,  issues,  and 
profits  thereof. 

To  have  and  to  hold,  all  and  singular  the  above-mentioned  and 
described  real  property,  together  with  the  appurtenances  thereof,  unto  the 
said  party  of  the  second  part,  and  to  his  heirs  and  assigns  forever. 

IN  WITNESS  WHEREOF,  the  said  party  of  the  first  part  has  here- 
unto set  his  hand  the  day  and  year  first  herein  written. 

JOHN  SMITH. 

S'gned  an-1  delivered  in  the 
presence  of 

GEORGE  SMITH. 

Quit-claim  Deed. 

THIS  INDENTURE,  made  the  first  day  of  October,  in  the  year 

one  thousand  eight  hundred  and  eighty-six,  between  John  Smith,  of  the 
city  and  county  of  San  Francisco,  State  of  California,  the  party  of  the 
first  part,  and  John  Jones,  of  the  same  place,  the  party  of  the  second  part. 


DEEDS.  137 


WITNESSETH,  That  the  said  party  of  the  first  part,  for  and  in  consid- 
eration of  the  sum  of  ten  dollars,  gold  coin  of  the  United  States  of 
America,  to  him  in  hand  paid  by  the  said  party  of  the  second  part,  the 
receipt  whereof  is  hereby  acknowledged,  has  remised,  released,  and  for- 
ever quitclaimed,  and  by  these  presents  does  remise,  release,  and  forever 
quitclaim,  unto  the  said  party  of  the  second  part,  and  to  his  heirs  and 
assigns,  all  that  certain  lot,  piece,  or  parcel  of  land,  situate,  lying,  and 
being  in  the  city  and  county  of  San  Francisco,  State  of  California,  and 
bounded  and  particularly  described  as  follows,  to  wit: —  fit 
[Here  describe  property.] 

Together  with  all  and  singular  the  tenements,  hereditaments,  and 
appurtenances  thereunto  belonging,  or  in  anywise  appertaining,  and  the 
reversion  and  reversions,  remainder  and  remainders,  rents,  issues,  and 
profits  thereof;  and  also  all  the  estate,  right,  title,  interest,  property,  pos- 
session, claim,  and  demand  whatsoever,  as  well  in  law  a's  in  equity,  of  the 
said  party  of  the  first  part,  of,  in,  and  to  the  said  premises,  and  every  part 
and  parcel  thereof,  with  the  appurtenances; 

To  have  and  to  hold  all  and  singular  the  said  premises,  together  with 
the  appurtenances,  unto  the  said  party  of  the  second  part,  and  to  his  heirs 
and  assigns  forever. 

IN  WITNESS  WHEREOF,  the  said  party  of  the  first  part  has  hereunto 
set  his  hand  the  day  and  year  first  above  written.  JOHN  SMITH. 

Signed  and  delivered  in  the 


presence  of 

WILLIAM  GREEN. 


Deed  of  Gift. 


THIS  INDENTURE,  made  the  first  day  of  October,  in  the  year  one 
thousand  eight  hundred  and  eighty-six,  between  John  Smith,  of  the  city 
and  county  of  San  Francisco,  State  of  California,  the  party  of  the  first 
part,  and  George  Smith,  of  the  same  place,  son  of  said  John  Smith, 
the  party  of  the  second  part, 

WITNESSETH,  That  the  said  party  of  the  first  part,  for  and  in  consid- 
eration of  the  love  and  affection  which  the  said  party  of  the  first  part  has 
and  bears  unto  the  said  party  of  the  second  part,  as  also  for  the  better 
maintenance,  support,  protection,  and  livelihood  of  the  said  party  of  the 
second  part,  does  by  these  presents  give,  grant,  alien,  and  confirm  unto  the 
said  party  of  the  second  part,  and  to  his  heirs  and  assigns  forever,  all  that 
certain  lot,  piece,  or  parcel  of  land,  situate,  lying,  and  being  in  the  city 
and  county  of  San  Francisco,  State  of  California,  and  bounded  and 
described  as  follows,  to  wit: — 

[Here  describe  property.] 

Together  with  all  and  singular  the  tenements,  hereditaments,  and  ap- 
purtenances thereunto  belonging,  or  in  anywise  appertaining,  and  the 
reversion  and  reversions,  remainder  and  remainders,  ^nts,  issues,  and 
profits  thereof. 

To  have  and  to  hold  all  and  singular  the  said  premises,  together  with 
the  appurtenances,  unto  the  said  party  of  the  second  part,  his  heirs  and 
assigns  forever. 

IN  WITNESS  WHEREOF,  the  said  party  of  the  first  part  has  hereunto 
set  his  hand  the  day  and  year -first  above  written.  JOHN  SMITH. 

Signed  and  delivered  in  the 
presence  of 

JOHN  JONE». 


138  REAL  PROPERTY  CONTRACTS. 

Partition  Deed. 

THIS  INDENTURE,  made  at  the  city  and  county  of  San  Francisco, 
State  of  California,  this  first  day  of  October,  one  thousand  eight  hundred 
and  eighty-six,  by  and  between  John  Jones,  John  Smith,  and  John  Robin- 
son, of  said  city  and  county  and  State, 

WITNESSETH,  That  whereas  the  said  Smith,  Jones,  and  Robinson  are 
now  the  owners  and  holders  in  common  of  that  certain  parcel  of  land 
situated  in  the  county  of  Tulare,  State  of  California,  and  particularly 
described  as  follows,  to  wit:  The  east  half  of  section  12,  township  19 
south,  range  25  east  of  Mount  Diablo  base  and  meridian,  in  the  following 
proportions,  namely,  the  said  Jones  owning  an  undivided  one-fourth  (^) 
part,  the  said  Smith  owning  an  undivided  one-fourth  (%)  part,  and  the 
said  Robinson  owning  an  undivided  one-half  (}4)  part  of  the  said  land; 

And  whereas  the  said  parties  desire  to  partition  and  divide  the  said 
lands  in  severally  amongst  themselves  as  hereinafter  provided; 

Now,  therefore,  in  consideration  of  the  premises  and  of  the  sum  of 
one  dollar  ($1.00)  to  them  in  hand  paid  by  said  Jones,  the  said  Smith  and 
Robinson  do  hereby  grant,  bargain,  and  sell  unto  the  said  Jones,  his  heirs 
and  assigns  forever,  all  that  certain  tract  of  land  in  said  county  and  State, 
described  as  follows:  The  east  half  of  the  northeast  quarter  of  section 
12,  township  19  south,  range  25  east  of  Mount  Diablo  base  and  meridian, 
containing  80  acres. 

And  the  said  Jones  and  Robinson,  in  consideration  of  the  premises 
and  of  the  sura  of  one  dollar  ($1.00)  to  them  in  hand  paid  by  said  Smith, 
do  hereby  grant,  bargain,  and  sell  unto  the  said  Smith,  his  heirs  and  as- 
signs forever,  that  certain  parcel  of  land  in  said  county  and  State,  de- 
scribed as  follows,  viz:  The  west  half  of  the  northeast  quarter  of  said 
section  12,  township  19  south,  range  25  east  of  Mount  Diablo  base  and 
meridian,  containing  80  acres. 

And  the  said  Jones  and  Smith,  in  consideration  of  the  premises 
and  of  the  sum  of  one  dollar  ($i.po)  to  them  in  hand  paid  by  the 
said  Robinson,  do  hereby  grant,  bargain,  and  sell  unto  the  said  Robin- 
son, his  heirs  and  assigns  forever,  that  certain  parcel  of  land  in  said 
county  and  State,  described  as  follows,  to  wit:  The  southeast  quarter  of 
said  section  12,  township  19  south,  range  25  east  of  Mount  Diablo  base 
and  meridian,  containing  160  acres; 

The  said  several  grantors  hereby  granting  and  conveying  to  the  said 
several  grantees  all  and  singular  the  hereditaments  and  appurtenances  be- 
longing or  appertaining  to  the  respective  parcels  of  land  hereby  granted 
and  conveyed. 

IN  WITNESS  WHEREOF,  the  said  parties  have  hereunto  set  their  hands 
this  first  day  of  October,  1886.  JOHN  JONES, 

JOHN  SMITH, 
JOHN  ROBINSON. 

Signed  and  delivered  in  the 
presence  of 

WILLIAM  GREEN. 

Mortgage  of  Real  Estate. 

[SEE  PAGE  106.] 

THIS  INDENTURE,  made  the  first  day  of  October,  in  the  vear 
one  thousand  eight  hundred  and  eighty-six,  between  John  Smifli,  of  the 
city  and  county  of  San  Francisco,  State  of  California,  the  party  of  the 


MORTGAGES. 


first  part,  and  John  Jones,  of  the  county  of  Alameda,  State  aforesaid, 
the  party  of  the  second  part, 

WiTNESSETH,  Whereas  the  said  party  of  the  first  part  is  justly  in- 
debted to  the  said  party  of  the  second  part,  in  the  sum  of  ten  thousand 
dollars,  gold  coin  of  the  United  States  of  America,  secured  to  be  paid 
by  a  certain  promissory  note,  bearing  even  date  with  these  presents,  which 
said  note  is  in  the  words  and  figures  following,  to  wit: — 

$10,000.  f  SAN  FRANCISCO,  October  i,  1886. 

One  year  after  date,  for  value  received,  I  promise  to  pay  to  the  order  of  John  Jones, 
the  sum  of  ten  thousand  dollars,  gold  coin  of  the  United  States,  with  interest  thereon 
from  date  until  paid,  at  the  rate  of  seven  per  cent  per  annum,  payable  quarterly,  in  like 
gold  coin;  and  in  case  default  be  made  in  the  payment  of  any  installment  of  interest 
when  due  and  payable,  the  same  shall  thereupon  be  added  to  the  principal  sum  and 
become  a  part  thereof,  and  shall  thereafter  bear  interest  and  be  compounded  quarterly 
at  the  same  rate. 

This  note  is  secured  by  mortgage  of  certain  real  estate  in  this  city  and  county,  of 
even  date  herewith.  JOHN  SMITH. 

Now  this  indenture  witnesseth  that  the  said  party  of  the  first 
part,  for  the  better  securing  the  payment  of  the  said  sum  of  money 
secured  to  be  paid  by  the  said  promissory  note,  with  interest  thereon, 
according  to  the  true  intent  and  meaning  thereof,  and  also  for  and  in  con- 
sideration of  the  sum  of  one  dollar,  to  him  in  hand  paid  by  the  said  party 
of  the  second  part,  at  or  before  the  execution  and  delivery  of  these  pres- 
ents, the  receipt  whereof  is  hereby  acknowledged,  has  granted,  bargained, 
sold,  conveyed,  and  confirmed,  and  by  these  presents  does  grant,  bargain, 
sell,  convey,  and  confirm,  unto  the  said  party  of  the  second  part,  and  to 
his  heirs  and  assigns  forever,  all  that  certain  lot,  piece,  or  parcel  of  land, 
situate,  lying,  and  being  in  the  city  and  county  of  San  Francisco,  State  of 
California,  and  bounded  and  particularly  described  as  follows,  to  wit: — 
*  [Here  describe  property.] 

*,''  Together  with  all  and  singular  the  tenements,  hereditaments,  ana 
ap^artenances  thereunto  belonging,  or  in  anywise  appertaining,  and  the 
reversion  and  reversions,  remainder  and  remainders,  rents,  issues,  and 
profits  thereof;  and,  also,  all  the  estate,  right,  title,  interest,  property, 
possession,  claim,  and  demand  whatsoever,  as  well  in  law  as  in  equity,  of 
the  said  party  of  the  first  part,  of,  in,  and  to  the  said  premises,  and  every 
part  and  parcel  thereof,  with  the  appurtenances. 

To  have  and  to  hold  the  said  premises  with  the  appurtenances  unto 
the  said  party  of  the  second  part,  his  heirs  and  assigns  forever. 

Provided  always,  and  these  presents  are  upon  this  express  condition: 
that  if  the  said  party  of  the  first  part,  his  heirs,  executors,  and  administrators, 
shall  well  and  truly  pay,  or  cause  to  be  paid,  to  the  said  party  of  the  sec- 
ond part,  his  executors,  administrators,  or  assigns,  the  said  sum  of  money 
secured  to  be  paid  by  the  said  promissory  note,  and  the  interest  thereon, 
at  the  times  and  in  the  manner  mentioned  in  the  said  promissory  note, 
according  to  the  true  intent  and  meaning  thereof,  then,  and  in  that  case, 
these  presents,  and  the  estate  hereby  granted,  shall  cease,  determine,  and 
be  void.  And  the  said  party  of  the  first  part,  for  himself  and  his  heirs, 
executors,  and  administrators,  does  hereby  covenant,  promise,  and  agree 
to  pay  to  the  said  party  of  the  second  part,  his  executors,  administrators, 
or  assigns,  the  said  sum  of  money  and  interest  as  mentioned  in  said  prom- 
issory note,  and  secured  to  be  paid  as  aforesaid.  And  if  default  shall  be 
made  in  the  payment  of  the  said  sum  of  money,  or  any  part  thereof,  as 
provided  in  said  note,  or  if  the  interest  that  may  grow  due  thereon,  or  any 


140  REAL  PROPERTY  CONTRACTS. 

part  thereof,  shall  be  behind  and  unpaid  for  the  space  of  thirty  days  after 
the  same  should  have  been  paid,  according  to  the  terms  of  said  prom- 
issory note,  then  and  from  thenceforth  it  shall  be  optional  with  said  party 
of  the  second  part,  his  executors,  administrators,  a  d  assigns,  to  consider 
the  whole  of  said  principal  sum  expressed  in  said  note,  as  immediately 
due  and  payable,  although  the  time  expressed  in  said  note  for  the  payment 
thereof  shall  not  have  arrived,  and  immediately  to  enter  into  and  upon  all 
and  singular  the  premises  hereby  granted  or  intended  so  to  be,  and  to  sell 
and  dispose  of  the  same,  and  all  benefit  and  equity  of  redemption  of  the 
said  party  of  the  first  part,  his  heirs,  executors,  administrators,  or  assigns, 
according  to  law;  and  out  of  the  money  arising  from  such  sale  to  retain 
the  principal  and  interest  which  shall  then  be  due  on  the  said  promissory 
note,  together  with  the  costs  and  charges  of  foreclosure  suit,  and  also  the 
sum  of  two  hundred  dollars,  and  a  percentage  at  the  rale  of  five  per 
cent  upon  the  amount  of  judgment  recovered  as  counsel  fees  (or  in  case 
the  said  foreclosure  suit  is  settled  before  judgment  recovered,  the  amouat 
due  the  plaintiff  on  said  note  and  this  mortgage,  and  as  counsel  fees,  the 
sum  of  five  hundred  dollars),  and  also  the  amounts  of  all  such  payments 
of  liens  or  other  incumbrances  as  may  have  been  made  by  said  party  of 
the  second  part,  his  heirs,  executors,  administrators,  or  assigns,  by  reason 
of  the  permission  hereinafter  given,  with  interest  on  the  same  as  hereinafter 
allowed,  rendering  the  overplus  of  the  purchase  money  (if  any  there  shall 
be)  unto  the  said  party  of  the  first  part,  his  heirs,  executors,  administrators, 
or  assigns.  And  the  said  party  of  the  first  part  does  hereby  further  cove- 
nant, promise,  and  agree,  to  and  with  the  said  party  of  the  second  parl, 
to  pay  and  discharge  at  maturity  all  such  liens  or  other  incumbrances  now 
subsisting  or  hereafter  to  be  laid  or  imposed  upon  said  premises  (excepting 
for  taxes  and  assessments  levied  or  assessed  upon  this  mortgage  or  upon 
the  money  secured  hereby)  or  which  may  be  in  effect  a  prior  charge  there  - 
upon,  during  the  continuance  hereof;  and  in  default  thereof,  the  said  party 
of  the  second  part  may  pay  and  discharge  the  same,  and  may,  at  his 
option,  keep  fully  insured  against  all  risks  by  fire,  the  buildings  whic  i 
are  now,  or  may  be  hereafter,  erected  thereon,  at  the  expense  of  the  sai  1 
party  of  the  first  part,  and  the  sums  so  paid  shall  be  repayable  in  th  -. 
same  kind  of  money  or  currency  in  which  the  same  may  have  been  paid , 
and  shall  bear  interest  at  the  rate  of  one  per  cent  per  month,  and  shall  be 
considered  as  secured  by  these  presents,  and  be  a  lien  upon  said  pr  miser , 
and  shall  be  deducted  from  the  proceeds  of  the  sale  thereof,  above  mei.- 
tioned,  with  interest  as  herein  provided. 

IN  WITNESS  WHEREOF,  the  said  party  of  the  first  part  has  hereunt  D 
set  his  hand  the  day  and  year  first  above  written. 

JOHN  SMITH. 

Signed  and  delivered  in  the 
presence  of 

THOMAS  JONES. 

Assignment  of  Mortgage. 

[SEE  PAGE  107.] 

KNOW  ALL  MEN  BY  THESE  PRESENTS,  that  John  Jcr.es,  of 
the  county  of  Alameda,  State  of  California,  party  of  the  first  part,  for  an-J 
in  consideration  of  the  sum  of  one  thousand  dollars,  gold  coin  of  the 
United  States,  to  him  in  hand  paid  by  Thomas  C.  Knox,  of  the  county 
of  Tulare,  State  aforesaid,  the  party  of  the  second  part,  the  receipt 


MORTGAGES.  141 

whereof  is  hereby  acknowledged,  does,  by  these  presents,  grant,  bargain, 
sell,  assign  and  set  over  unto  the  said  party  of  the  second  part  a  certain 
indenture  of  mortgage  bearing  date  the  first  day  of  October,  one  thou- 
sand eight  hundred  and  eighty-six,  made  and  executed  by  one  John 
Smith,  of  the  city  and  county  of  San  Francisco,  State  of  California, 
mortgagor,  to  said  John  Jones,  mortgagee,  and  recorded  in  the  office  of 
the  County  Recorder  of  the  said  city  and  county  of  San  Francisco,  in 
Liber  209  of  Mortgages,  at  page  420  thereof; 

Together  with  the  note  therein  described  and  thereby  secured,  and 
the  money  due  and  to  become  due  thereon,  with  the  interest;  and  the  said 
party  of  the  first  part  does  hereby  make,  constitute,  and  appoint  the  said 
party  of  the  second  part,  his  true  and  lawful  attorney,  irrevocable,  in  the 
name  of  the  said  party  of  the  first  part,  or  otherwise,  but  at  the  proper  costs 
and  charges  of  the  said  party  of  the  second  part,  to  have,  use,  and  take 
all  lawful  ways  and  means  for  the  recovery  of  said  money  and  interest; 
and,  in  the  case  of  the  payment  thereof,  to  discharge  the  same  as  fully  as  the 
party  of  the  first  part  could  or  might  do  if  these  presents  were  not  made. 

IN  WITNESS  WHEREOF,  the  said  party  of  the  first  part  has  hereunto 
set  his  hand  the  first  day  of  February,  1887.  JOHN  JONES. 

Si  nied  and  delirered  in  the 
presence  of 

WILLIAM  GREEN. 

Short  Form  to  Be  Indorsed  on  Mortgage. 

For  value  received,  I  do  hereby  sell,  transfer,  assign,  and  set  over, 
aito  Thomas  C.  Knox,  the  within  indenture  of  mortgage,  together  with 
th?  note  accompanying  the  same. 

WITNESS  my  hand  this  first  day  of  February,  1887. 

JOHN  JONES. 

E '  ecuted  in  presence  of 
WILLIAM  GREEN. 

Partial  Release  of  Mortgage. 

KNOW  ALL  MEN  BY  THESE  PRESENTS,  that  for  and  in  con- 
si  leration  of  the  sum  of  twc^  hundred  and  fifty  dollars  ($1,250),  the 
receipt  whereof  is  hereby  acknowledged,  that  certain  parcel  of  land  situ- 
ated, lying,  and  beinpr  in  the  county  of  Tulare,  State  of  California,  and 
particularly  described  us  follows,  to  wit:  The  north  half  of  the  northeast 
quarter  of  section  12,  township  19  south,  range  25  east  of  Mount  Diablo 
base  and  meridian,  containing  80  acres  of  land,  is  hereby  released  from  the 
lien  of  that  certain  mortgage  made  by  John  Smith,  of  the  city  and  county 
of  San  Francisco,  State  of  California,  mortgagor,  to  John  Jones,  mort- 
gagee, dated  January  I,  1886,  and  recorded  in  the  office  of  the  County 
Recorder  of  said  county  of  Tulare,  in  Liber  17  of  Mortgages,  at  page 
4_9  thereof. 

IN  WITNESS  WHEREOF,  the  said  John  Jones  has  hereunto  set  his  hand 
this  first  day  of  October,  1886.  JOHN  JONES. 

Signed  and  delivered  in  the 
p  esencs  of 

WILLIAM  GREEN. 

Satisfaction  of  Mortgage. 

KNOW  ALL  MEN  BY  THESE  PRESENTS,  that  that  certain 
mortgage  made  by  John  Smith,  of  the  city  and  county  of  San  Francisco, 


142  REAL  PROPERTY  CONTRACTS. 

State  of  California,  mortgagor,  to  me,  John  Jones,  mortgagee,  dated  the 
first  day  of  January,  one  thousand  eight  hundred  and  eighty-six,  and  re- 
corded in  the  office  of  the  County  Recorder  of  the  county  of  Tulare, 
State  of  California,  in  Liber  17  of  Mortgages,  at  page  429,  together  with 
the  debt  thereby  secured,  has  been  and  is  fullypaid,  satisfied,  and  discharged. 
IN  WITNESS  WHEREOF,  I  have  hereunto  set  my  hand  this  first  day  of 
January,  1887.  JOHN  JONES. 

Signed  and  delivered  in  the 
presence  of 

WILLIAM  GREEN. 

Farming  Lease. 

THIS  INDENTURE,  made  the  first  day  of  October,  in  the  ye,ir 
one  thousand  eight  hundred  and  eighty-six,  by  and  between  J[ohn  Smith, 
of  the  city  and  county  of  San  Francisco,  State  of  California,  party  of 
the  first  part,  and  John  Jones,  of  the  tcwn  of  St.  Helena,  county  of 
Napa,  State  aforesaid,  party  of  the  second  part, 

WITNESSETH,  That  said  party  of  the  first  part  for  and  in  consideration 
of  the  rents  and  covenants  hereinafter  mentioned,  reserved  and  coa- 
tained,  on  the  part  of  the  said  party  of  the  second  part  to  be  paid,  kept, 
and  performed,  does,  by  these  presents,  grant,  demise,  and  let  unto  the 
said  party  of  the  econd  part,  his  executors,  administrators,  and  assigns 
for  the  term  of  four  years,  from  this  first  day  of  October,  one  thousand 
eight  hundred  and  eighty-six,  all  that  certain  lot,  piece,  or  parcel  of  land 
situated,  lying,  and  being  in  the  said  county  of  Napa,  State  of  California, 
and  bounded  and  described  as  follows,  to  wit:  Commencing  at  a  point  on 
the  northerly  side  of  the  road  leading  from  the  town  of  St.  Helena  to  the 
Whire  Sulphur  Springs,  where  said  road  crosses,  etc. 

[Here  insert  description.] 

Being  the  land  known  as  Smith's  Ranch,  and  containing  one  hundred  and 
forty  acres;  to  have  and  to  hold  the  said  premises  unto  the  said  party  of 
the  second  part,  his  heirs,  executors,  and  administrators  for  and  during 
the  term  aforesaid,  together  with  all  tenements  and  hereditaments  there- 
unto appertaining,  and  all  the  stock  and  farming  utensils  now  in  and  on  the 
said  land  and  belonging  to  the  said  party  of  the  first  part; 

In  consideration  whereof  the  said  party  of  the  «econd  part  hereby  cove-, 
nants  and  agrees  that  he  will  occupy,  till,  and  cultivate  all  the  land  and  prem- 
ises above  mentioned  during  the  term  aforesaid,  in  good  and  husband-like 
manner,  and  according  to  the  usual  course  of  husbandry  practiced  in  the 
neighborhood;  that  he  will  not  commit  any  waste  or  damage  or  suffer  any  to  be 
done;  that  he  will,  at  his  own  expense  and  cost,  keep  the  fences  and  build- 
ings on  said  premises  in  good  repair  (reasonable  wear  thereof  and  damages  by 
the  elements  excepted);  that  he  will,  during  each  of  the  seasons  of  said  terms 
and  at  the  proper  times,  plant  upon  the  said  land  a  full  crop  of  wheat  and  bar- 
ley, and  will  properly  cultivate  and  harvest  the  same,  and  that  he  will  cause 
the  same  when  harvested,  to  be  properly  threshed  and  sacked,  and 
that  immediately  upon  completion  of  the  harvesting,  threshing  and  sacking 
of  any  crop,  he  will  set  apart  therefrom  an  amount  thereof  equal  to 
one-third  of  the  whole  number  of  sacks  so  harvested  and  threshed,  and 
upon  the  sacks  so  set  apart  will  forthwith  mark  with  a  stencil  the  name  of 
the  said  party  of  the  first  part,  to  wit,  J.  Smith,  and  will  immediately  there- 
after deliver  all  the  sacks  so  set  apart  and  marked  to  the  said  party  of  the 


LEASES.  143 

first  part  at  the  town  of  St.  Helena  aforesaid,  and  at  such  point  in  said 
town  as  the  said  party  of  the  first  part  may  direct. 

It  is  further  understood  and  agreed  between  the  aforesaid  parties 
that  the  said  party  of  the  second  part  shall  find  and  furnish,  at  his  own  ex- 
pense, all  grain  or  seed  to  be  sown  on  said  premises,  and  all  labor  that 
shall  be  required  in  the  farming  and  cultivation  thereof;  that  he  shall  have 
full  permission  to  inclose  and  pasture,  or  till  and  cultivate,  the  said  prem- 
ises so  far  as  the  same  may  be  done  without  injury  to  the  reversion 
and  without  hindrance  to  the  performance  of  the  covenants  hereinabove 
contained,  as  well  as  to  cut  all  timber  that  shall  be  necessary  for  fire- 
wood, farming  purposes,  and  repairing  of  fences;  and  that,  at  the  expira- 
tion of  said  term  or  earlier  determination  of  this  lease,  he  will  yield  and 
give  up  possession  of  the  said  premises  in  good  order  and  repair. 

IN  WITNESS  WHEREOF,  the  said  parties  have  hereunto  and  to  a 
duplicate  hereof  set  their  hands,  the  day  and  year  first  above  written. 

JOHN  SMITH, 
JOHN  JONES. 

Signed  and  delivered  in  the 
presence  of 

WILLIAM  GRKKN. 

House  Lease. 

[SEE  PAGE  107.] 

THIS  INDENTURE,  made  and  entered  into  at  the  city  and  county 
of  San  Francisco,  this  first  day  of  October,  one  thousand  eight  hundred 
and  eighty-six,  between  John  Smith,  lessor,  and  John  Jones,  lessee,  both 
of  said  city  and  county, 

WITNESSETH,  That  the  said  lessor  has  leased,  and  by  these  presents 
does  lease,  demise,  and  let  unto  the  said  lessee,  and  the  said  lessee  has 
hired  and  taken,  and  by  these  presents  does  hire  and  take  of  and  from 
the  said  lessor,  all  that  certain  lot  and  parcel  of  land  situated  in  the  said 
city  and  county,  and  particularly  bounded  and  described  as  follows: 
Commencing  on  the  northerly  line  of  Post  Street,  etc. 

[Here  insert  description  of  lot.] 

Together  with  the  building  thereon,  with  the  appurtenances  thereof,  for  the 
term  of  two  years  from  the  first  day  of  October,  1 886,  at  a  monthly 
rental  or  sum  of  one  hundred  and  fifty  dollars  ($150,)  payable  monthly  in 
•advance,  on  the  first  day  of  each  and  every  month  of  said  term,  in  equal 
payments  of  one  hundred  and  fifty  dollars  ($150),  gold  coin  of  the  United 
States. 

And  it  is  agreed  that,  if  any  rent  shall  remain  due  and  unpaid  for  the 
period  of  ten  days  after  the  same  shall  have  become  payable,  or  if  default 
shall  be  made  in  any  of  the  covenants  herein  contained,  then  it  shall  be 
lawful  for  the  said  lessor  to  re-enter  on  said  premises  and  to  remove  all 
persons  therefrom.  And  the  said  lessee  does  hereby  covenant  to  pay  to  the 
said  lessor  the  monthly  rental  herein  reserved,  and  in  the  manner  herein 
speciiied.  and  not  to  make  or  suffer  to  be  made^any  alterations  in  the  building 
upon  said  premises  without  the  written  consent  of  the  lessor,  and  not  to 
ass  gn  this  lease  or  sub-let  the  said  premises  or  any  part  thereof  without  the 
written  consent  of  the  said  lessor;  and  does  further  covenant  not  to  use 
the  said  premises  for  any  other  purpose  than  that  of  a  dwelling-house,  and 
further  covenants  to  pay  and  discharge  all  sums  that  shall  become  due  dur- 
ing the  said  term  for  water  used  and  consumed  upon  or  furnished  to  the 


144  REAL  PROPERTY  CONTRACTS. 

said  premises;  and  does  covenant  that  at  the  expiration  of  said  term,  or 
any  earlier  determination  of  this  lease,  the  lessee  will  quit  and  surrender  the 
premises  hereby  demised,  in  as  good  order  and  condition  as  reasonable 
use  and  wear  thereof  will  permit  (damages  by  the  elements  excepted);  and 
if  the  said  lessee  shall  hold  the  said  premises  longer  than  said  term,  with 
the  consent,  expressed  or  implied,  of  the  said  lessor,  such  holding  shall 
be  construed  to  be  a  tenancy  only  from  month  to  month. 

It  is  further  agreed  that  the  said  lessor  shall  not  be  called  upon  to 
make  any  improvements  or  repairs  whatsoever  upon  said  demised  prem- 
ises, during  the  said  term;  and  the  said  lessee  covenants  and  agrees  to  keep 
the  same  in  good  order  and  condition  at  his  own  expense. 

IN  WITNESS  WHEREOF,  the  said  parties  have  hereunto  and  to  a 
duplicate  hereof  set  their  hands,  on  the  day  and  year  first  above  written. 

JOHN  SMITH, 
JOHN  JONKS. 

Signed  and  delivered  in  the 
presence  of 

WILLIAM  GREEN, 

Guaranty  of  Rent. 

[To  be  attached  to  lease.] 

In  consideration  of  the  foregoing  lease  or  agreement,  and  of  the  sum 
of  one  dollar  ($1.00)  to  me  in  hand  paid  by  John  Smith,  the  lessor  therein, 
the  receipt  whereof  is  hereby  acknowledged,  I  do  hereby  covenant,  prom- 
ise, and  agree  to  and  with  the  said  John  Smith  that  the  said  John  Jones, 
lessee  of  said  lease,  shall  well  and  truly  pay  all  rents  and  perform  and  ex- 
ecute all  covenants  therein  contained  on  his  part,  and  that  on  his  failure 
so  to  do  in  any  particular,  I  will  forthwith  pay  unto  the  said  John  Smith 
all  rents  that  shall  be  due  under  said  lease,  and  all  damages  that  may  hap- 
pen or  accrue  to  said  John  Smith  by  reason  of  such  failure;  and  I  herewith 
waive  all  requirements  of  demand  upon  said  John  Jones  for  payment  of 
such  rent  and  for  performance  of  said  covenants,  and  waive  notice  of 
non-payment  and  non-performances. 

IN  WITNESS  WHEREOF,  I  have  hereunto  set  my  hand  this  first  uay  of 
October,  1886.  JOHN  J.  K.NOX. 

Signed  and    elivered  in  the 
presence  of 

WILLIAM  GREEN. 

Assignment  of  Lease. 

[Intended  for  recording.] 

KNOW  ALL  MEN  BY  THESE  PRESENTS,  that  I,  John  Jones, 
of  the  city  and  county  of  San  Francisco,  State  of  California,  for  and  in 
consideration  of  the  sum  of  three  hundred  dollars,  to  me  in  hand  paid 
by  Henry  Hall,  of  the  place  aforesaid,  do  hereby  grant,  convey,  transfer, 
and  assign  to  the  said  Henry  Hall,  a  certain  indenture  of  lease  for  the 
term  of  two  years,  from  the  first  day  of  October,  one  thousand  eight 
hundred  and  eighty-six,  recorded  in  Liber  10  of  Leases,  page  146,  in  the 
Recorder's  office  of  said  city  and  county  of  San  Francisco,  and  made  by 
John  Smith,  of  the  city,  county,  and  State  aforesaid,  to  me,  the  said  John 
J  ones,  of  a  certain  dwelling-house  and  lot,  situate,  lying,  and  being  in  the 
said  city  of  San  Francisco,  and  described  as  follows,  to  wit: — 
[Insert  description.] 


NO  TJCES  B  Y  LANDL  ORD.  145 

With  all  and  singular  the  premises  therein  described,  and  the  buildings 
therron,  together  with  the  appurtenances;  to  have  and  to  hold  the  same 
unto  the  said  Henry  Hall,  his  heirs  and  assigns  from  the  date  hereof  for 
and  during  the  remainder  of  the  term  of  said  lease;  subject,  nevertheless, 
to  the  rents,  covenants,  conditions,  and  provisions  therein  mentioned. 
And  I  do  hereby  covenant  and  agree  to,  and  with  the  said  Henry  Hall, 
that  the  said  assigned  premises  are  now  free  and  clear  of  and  from  all 
gifts,  grants,  leases,  judgments,  back  rents,  taxes,  and  incumbrances  by 
me  suffered,  made,  or  created. 

IN  WITNESS  WHEREOF,  I  have  hereunto  set  my  hand  the  first  day 
of  December,  1886.  JOHN  JONES. 

Signed  and  delivered  in  the 
presence  of 

WILLIAM  GREEN. 

Short  Form  to  Be  Indorsed  on  Lease. 

[Intended  for  leases  which  are  not  recorded.] 

For  value  received,  I  do  hereby  sell,  grant,  and  assign  to  Henry 
Hall,  his  heirs  and  assigns,  the  within  written  indenture  of  lease,  and  all 
lay  estate,  right,  title,  and  interest  in  and  to  the  premises  therein  demised, 
uhich  I  now  have  by  means  of  said  indenture  or  otherwise;  subject,  nev- 
*rtheless,  to  the  rents  and  covenants  therein  reserved  and  contained. 

WITNESS  my  hand  this  first  day  of  December,  1886. 

JOHN  JONES. 

Ei. ecu  ted  in  presence  of 
WILLIAM  GREEN. 

Notice  to- Change  Terms  of  Lease. 

[To  be  given  at  least  fifteen  days  before  increase  of  rent.] 

TO  JOHN  SMITH,  ESQ.— 

You  are  hereby  notified  that  at  the  expiration 

ol  the  present  month  of  your  tenancy,  which  will  be  on  the  first  day  of 
January,  one  thousand  eight  hundred  and  eighty-seven,  the  terms  of  your 
lease  of  the  premises  you  occupy,  under  tenancy  from  month  to  month, 
situated  in  the  city  and  county  of  San  Francisco,  and  described  as  fol- 
lows, to  wit:  All  that  certain  store  on  the  northerly  side  of  Post  Street, 
between  Montgomery  and  Kearny,  and  designated  and  known  as  No.  22 
Post  Street,  will  be  changed  as  follows,  to  wit: 

The  monthly  rent  thereof  will  be  three  hundred  dollars,  in  U.  S. 
gold  coin,  per  month,  payable  monthly  in  advance,  on  the  first  day  of 
( ach  and  every  month  you  continue  to  hold  possession  thereof,  after  the 
expiration  of  the  current  month,  instead  of  the  sum  of  two  hundred  dol- 
lars, 'heretofore  paid  by  you.  JOHN  JONES. 

Dated  San  Francisco,  the  fifteenth  day  of  December,  1886. 

Notice  to  Quit  by  Landlord. 

[Tenancy  from  month  to  month.] 
TO  JOHN  SMITH— 

You  are  hereby  required  to  quit  and  deliver  up  to  me 
the  possession  of  the  premises  now  held  and  occupied  by  you,  being  the 
10 


146  POWERS  OF  ATTORNEY. 

premises  known  as,  etc.,  and  situated,  etc.  [insert  description],  at  the  ex- 
piration of  the  month  of  your  tenancy  of  said  premises  commencing  on 
the  fifth  day  of  April,  1886,  and  ending  on  the  fifth  day  of  May,  1886. 

This  is  intended  as  a  month's  notice  to  quit,  for  the  purpose  of  termi- 
nating your  tenancy  as  aforesaid.  JOHN  JONES. 

Dated  April  4,  1 886. 

Notice  of  Quitting  by  Tenant. 

[Tenancy  from  month  to  month.] 
TO  JOHN  JONES— 

Please  take  notice  that  I  shall  quit  and  deliver  up  to  you 
possession  of  the  premises  now  held  and  occupied  by  me,  being  the  prem- 
ises known  and  described  as,  etc.  [insert  description],  at  the  end  of  this 
month  of  my  monthly  tenancy  thereof,  to  wit,  on  the  fifth  day  of  May, 
1886,  intending  to  move  therefrom  and  terminate  the  said  tenancy  on  the 
said  date. 

Dated  April  4,  1886.  JOHN  SMITH 

POWERS  OF  ATTORNEY. 

A  POWER  OF  ATTORNEY,  or,  as  it  is  sometimes  called,  a  letter  of 
attorney,  is  a  written  instrument  by  which  authority  is  given  to  one  person 
to  perform  some  lawful  act  for  another. 

A  power  of  attorney  to  execute  any  conveyance  affecting  real  estate 
should  be  acknowledged  before  a  notary  public,  and  duly  recorded.  In 
other  instances  acknowledgment  and  record  are  optional. 

The  authority  may  be  general — to  transact  all  business  of  the  prin- 
cipal; or  special — to  do  some  particular  act.  In  all  cases,  however,  the 
power  to  act  is  strictly  limited  to  the  authority  given  in  the  instrument. 

All  acts  performed  by  the  attorney  must  be  done  in  the  name  of  the 
principal,  and  all  instruments  must  be  signed  in  the  name  of  the  principal, 
by  or  per  the  attorney. 

An  attorney  may  delegate  his  authority  to  a  substitute  if  so  stated  in 
the  instrument,  but  not  otherwise. 

A  power  of  attorney  is  in  force  till  due  notice  of  revocation,  which, 
if  the  original  instrument  has  been  recorded,  must  be  placed  on  record 
at  the  same  office;  or  until  the  death  of  the  principal. 

Power  of   Attorney. 

[GENERAL.] 

KNOW  ALL  MEN  BY  THESE  PRESENTS,  that  I,  John 
Smith,  of  the  city  and  county  of  San  Francisco,  State  of  California, 
have  made,  constituted,  and  appointed,  and  by  these  presents  do  make, 
constitute,  and  appoint  John  Jones,  of  the  same  place,  my  true  and 
lawful  attorney  for  me  and  in  my  name,  place,  and  stead,  and  for  my 
use  and  benetit,  to  ask,  demand,  sue  for,  recover,  collect,  and  receive  all 
such  sums  of  money,  debts,  dues,  accounts,  legacies,  bequests,  interests, 
dividends,  annuities,  and  demands  whatsoever,  as  are  now  or  shall  here- 


POWERS  OF  ATTORNEY.  147 

after  become  due,  owing,  payable,  or  belonging  to  me,  and  to  have,  use 
and  take  all  lawful  ways  and  means  in  my  name  or  otherwise  for  the  recov- 
ery thereof,  by  attachments,  arrests,  distress,  or  otherwise,  and  to  compro- 
mise and  agree  for  the  same,  and  for  me  and  in  my  name,  to  make,  seal, 
and  deliver  acquittances  or  other  sufficient  discharges  for  the  same;  to 
bargain,  contract,  agree  for,  purchase,  receive,  and  take  lands,  tenements, 
hereditaments,  and  accept  the  seizin  and  possession  of  all  lands,  and  all 
deeds  and  other  assurances  in  the  law  therefor,  and  to  lease,  let,  demise, 
bargain,  sell,  remise,  release,  convey,  mortgage,  and  hypothecate  lands, 
tenements,  and  hereditaments  upon  such  terms  and  conditions,  and  under 
such  covenants  as  he  shall  think  fit.  Also,  to  bargain  and  agree  for,  buy, 
sell,  mortgage,  hypothecate,  and  in  any  and  every  way  and  manner  deal  in 
and  with  goods,  wares,  and  merchandise,  choses  in  action,  and  other  property 
in  possession  or  in  action,  and  to  make,  do,  and  transact  all  and  every 
kind  of  business  of  what  nature  and  kind  soever;  and  also  for  me  and  in 
my  name,  and  as  my  act  and  deed,  to  sign,  seal,  execute,  deliver,  and 
acknowledge  such  deeds,  covenants,  indentures,  agreements,  mortgages, 
hypothecations,  bottomries,  charter  parties,  bills  of  lading,  bills,  bonds, 
notes,  receipts,  evidences  of  debt,  releases  and  satisfaction  of  mortgage, 
judgment  and  other  debts,  and  such  other  instruments  in  writing  of  what- 
ever kind  and  nature  as  may  be  necessary  or  proper  in  the  premises. 

Giving  and  granting  unto  my  said  attorney  full  power  and  authority 
to  do  and  perform  all  and  every  act  and  thing  whatsoever  requisite  and 
necessary  to  be  done  in  and  about  the  premises,  as  fully  to  all  intents  and 
purposes  as  I  might  or  could  do  if  personally  present,  hereby  ratifying 
and  confirming  all  that  my  said  attorney  shall  lawfully  do  or  cause  to  be 
done  by  virtue  of  these  presents. 

IN  WITNESS  WHEREOF,  I  have  hereunto  set  my  hand  the  first  day 
of  October,  1886. 

JOHN  SMITH. 

Signed  and  delivered  in  the 
presence  of 

GEORGE  SMITH. 

Power  of  Attorney. 

[SPECIAL.] 

KNOW  ALL  MEN  BY  THESE  PRESENTS,  that  I,  John 
Smith,  of  the  city  and  county  of  San  Francisco,  State  of  California, 
have  made,  constituted,  and  appointed,  and  by  these  presents  do  hereby 
make,  constitute,  and  appoint  John  Jones,  of  the  same  place,  my  true 
and  lawful  attorney  for  me  and  in  my  name,  place,  and  stead,  to 
lease,  let,  demise,  bargain,  sell,  remise,  release,  and  convey,  upon  such 
terms  and  conditions,  and  under  such  covenants  as  he  shall  see  fit,  all  that 
certain  lot,  piece,  or  parcel  of  land  situated  in  the  city  and  county  of  San 
Francisco,  State  of  California,  and  particularly  bounded  and  described  as 
follow^,  to  wit: — 

Commencing  at  the  northwesterly  corner  of  Kearny  and  Post  Streets 
and  running  thence  northerly  along  the  westerly  line  of  Kearny  Street  one 
hundred  feet;  thence  at  a  right  angle  westerly  one  hundred  and  thirty-seven 
and  a  half  feet;  thence  at  a  right  angle  southerly  one  hundred  feet  to  the 
northerly  line  of  Post  Street;  and  thence  easterly  along  said  line  of  Post 
Street  to  the  point  of  commencement. 

Giving  and  granting  unto  my  said  attorney  full  power  and  author- 


148  POWERS  OF  ATTORNEY. 

ity  to  sign,  seal,  execute,  acknowledge,  and  deliver  all  such  deeds,  cove- 
nants, leases,  and  other  instruments  in  writing  as  may  be  necessary  or 
proper  in  the  premises,  and  to  do  and  perform  all  and  every  act  and  thing 
whatsoever  requi  ite  and  necessary  to  be  done  in  and  about  the  premises, 
as  fully  to  all  intents  and  purposes  as  I  might  or  could  do  if  personally 
present,  with  full  power  of  substitution  and  revocation,  hereby  ratifying 
and  confirming  all  that  my  said  attorney  shall  lawfully  do  or  cause  to  be 
done  by  virtue  of  these  presents. 

IN  WITNESS  WHEREOF,  I  have  hereunto  set  my  hand  the  first  day 
of  October,  1886. 

JOHN  SMITH. 

Signed  and  delivered  in  the 
presence  of 

GEORGS  SMITH. 

Power  of  Attorney. 

[Short  form.] 

I,  John  Smith,  hereby  appoint  and  constitute  John  Jones  my  attorney 
in  fact,  in  my  name,  place  and  stead,  to 

[Here  state  what  the  attorney  is  authorized  to  do.] 

Giving  and  granting  to  my  said  attorney  full  power  and  authority  tc 
do  everything  1  could  in  the  premises,  if  personally  present. 
WITNESS  my  hand  this  first  day  of  October,  1886. 

JOHN  SMITH. 

^  presence  of 

WILLIAM  GREEN. 

Proxy  to  Vote  Stock. 

KNOW  ALL  MEN  BY  THESE  PRESENTS,  that  I,  John  Jones, 
do  hereby  make,  constitute,  and  appoint  John  Smith  my  true  and  lawful 
attorney  for  me,  and  in  my  name,  place,  and  stead,  to  vote  as  my  proxy 
at  the  ^exi  annual  meeting  [or,  at  the  annual  meeting  to  be  held  Oct.  13, 
1886,  or,  at  any  meeting  of  the  stockholders  of  the  Poverty  Mining 
Company,  according  to  the  number  of  votes  to  which  t  would  be  entitled 
if  personally  present,  with  lull  power  of  substitution  and  revocation. 

IN  WITNESS  WHEREOF,  I  have  hereunto  set  my  hand  the  first  day 
of  October,  A,  n.  1886.  JOHN  JONES. 

Witness, 

WILLIAM  GBKEN. 

Substitution  of  Attorney-in-Fact. 

KNOW  ALL  MEN  BY  THESE  PRESENTS,  that  I,  John  Jones, 
of  the  city  and  county  of  San  Francisco,  State  of  California,  by  virtue  of 
the  power  and  autUv.  ity  to  me  given  in  and  by  the  letter  or  power  of 
attorney  of  John  Smith,  of  the  place  aforesaid,  bearing  date  the  first  day 
ot  October,  one  thousand  eight  hundred  and  eighty-six,  and  recorded  in 
the  recorder's  office  of  said  city  and  county  of  San  Francisco,  on  the 
third  day  of  October,  I&S^,  in  Book  4  of  Powers  of  Attorney,  page  172, 
authorizing  me  to  sell  Certain  real  estate  in  said  city  of  San  Francisco,  do 
substitute  and  appoint  Richard  Roe,  of  the  place  aforesaid,  as  well  for 
me  as  the  true  and  lawful  attorney  and  substitute  of  the  said  John 
Smith,  to  do,  *xecute,  and  perform  every  act  and  thing  which  I  might  or 


PARTNERSHIP.  1411 

could  do  in,  by,  and  under  the  said  instrument,  hereby  ratifying  and  con- 
firming all  that  the  said  attorney  and  substitute  shall  do  in  the  premises 
by  virtue  hereof,  and  of  the  said  letter  or  power  of  attorney. 

IN  WITNESS  WHEREOF,  I  have  hereunto  set  my  hand,  the  ninth  day 
of  December,  1886. 

JOHN  JONES. 

Executed  in  presence 
of 
WILLIAM  GREEN. 

[Acknowledgment  before  Notary  Public.} 

i?.T?f  ' 

Revocation  of  Power  of  Attorney. 

WHEREAS,  I,  John  Smith,  of  the  city  and  county  of  San  Fran- 
cisco,  State  of  California,  by  my  certain  power  of  attorney  bearing 
date  the  first  day  of  October,  one  thousand  eight  hundred  and  eighty- 
six,  did  appoint  John  Jones,  of  the  same  place,  my  true  and  lawful  at- 
torney, for  the  purposes  and  with  the  powers  therein  set  forth,  as  will 
-more  fully  and  at  large  appear  by  reference  thereto,  or  to  the  record 
thereof,  made  on  the  second  day  of  October,  1886,  in  Liber  4  of  Powers 
of  Attorney,  pa?e  172,  in  the  Recorder's  office  of  said  county. 

Now,  therefore,  know  all  men  by  these  presents,  that  I,  the  said 
John  Smith,  for  divers  good  causes  and  considerations  me  hereunto  mov- 
ing, have  countermanded  and  revoked,  and  by  these  presents  do  coun- 
termand and  revoke,  the  said  power  of  attorney,  and  all  authority  thereby 
given  or  intended  to  be  given  to  the  said  John  Jones. 

IN  WITNESS  WHEREOF,  I  have  hereunto  set  my  hand  the  fifteenth 
day  of  November,  1886. 

JOHN  SMITH. 

In  presence  of 

WILLIAM  GREEN. 

PARTNERSHIP. 

Extended  information  regarding  partners  may  be  had  by  consulting 
pages  59-67,  inclusive.  The  forms  for  limited  partnership  have  been 
omitted  because  they  are  very  complicated,  and  might  prove  misleading. 
In  this  matter  it  is  very  important  to  conform  strictly  with  the  statutes; 
therefore,  in  the  preparation  of  this,  as  well  as  all  other  instruments  dif- 
ficult to  draw  up,  it  is  better  to  secure  the  services  of  a  competent  attorney 
at-law,  rather  than  run  the  risk  of  «-ihsenuent  loss. 

General  Partnership  Agreement. 

This  memorandum  of  agreement,  made  and  entered  into  at  the  city 
and  county  of  San  Francisco,  State  of  California,  this  first  day  of  October, 
in  the  year  eighteen  hundr2d  and  eighty-six,  by  and  between  John  C. 
Bolt,  Henry  W.  Knox,  and  John  L.  Colman, 

WITNESSETH,  That  the  said  parties  have  this  day  associated  and  do 
hereby  associate  themselves  as  copartners  in  trade  in  the  city  and  county  of 
San  Francisco,  under  the  firm  name  and  style  of  Bolt,  Knox  &  Co.,  and 
do  make  and  enter  into  the  following  covenants  and  articles  of  agreement, 
for  and  respecting  their  said  copartnership  and  the  business  to  be  con- 
ducted by  it.  to  u-Jt: — 


150  PARTNERSHIP. 


1.  The  said  copartnership  shall  continue  for  the  space  of  three  years 
from  the  date  hereof,  but,  after  the  expiration  of  one  year  from  the  date 
hereof,  either  partner  shall  be  at  liberty  to  terminate  the  said  copartner- 
ship by  giving  notice  in  writing  to  his  copartners,  three  months  previously, 
of  his  intention  to  do  so. 

2.  The  said  copartners  shall  contribute  to  the  capital  stock  of  said 
copartnership  as  follows:    The  said  Bolt  and  Colman,  the  sum  of  ten 
thousand  dollars  each,  and  the  said  Knox  the  sum  of  live  thousand  dol- 
lars, all  in  gold  coin  of  the  United  States. 

3.  The  partners  shall  share  the  profits  of  their  said  business  in  the 
proportion  of  their  contrib.tions  to  the  capital  stock  thereof. 

4.  The  said  copartnership  shall  carry  on  and  transact  a  general  grocery 
and   provision    business,    and   the  character  of    the  business  shall   not 
be  changed  without  the  written  consent  of  all  the  parties  hereto. 

5.  No  partner  shall  receive  or  use  any  of  the  firm  money  for  any  pur- 
pose not  connected  with  their  regular  firm  business,  or  shall  sign  or  indorse 
any  promissory  note,  bond,  obligation,  or  agreement,   made  in  the  firm 
name  or  in  his  individual  name,  or  become  surety  for  the  benefit  or  accom- 
modation of  any  person,  without  the  written  consent  of  his  copartners. 

6.  Each  partner  shall  devote  his  exclusive  and  entire  attention  to  the 
business  of  the  firm,  and  shall  engage  in  no  other  business  or  transaction 
whatever;  but  this  shall  not  be  held  or  construed  to  prevent  either  partner 
from  investing  or  employing  his  private  means  in  any  transaction  he  may 
please,  provided,  however,  that  he  do  not  employ  or  invest  them  in  any 
business  that  may  conflict  with  or  be  injurious  to  the  business  of  the  co- 
partnership. 

7.  The  said  partners  shall  be  allowed  to  draw  from  the  said  firm  an 
amount  of'  cash  for  personal  expenses  not  to  exceed  the  sum  of   two 
hundred  dollars  per  month  each. 

8.  The  profits  of  the  business  shall  be  suffered  to  remain  in  the  busi- 
ness, and  no  part  of  the  same  shall  be  withdrawn  except  by  the  consent 
of  all  parties. 

9.  Full,  truthful,  and  perfect  books  of  account  shall  be  kept,  to  which 
each  partner  shall  have  at  all  times  access;  balances  shall  be  struck  and 
balance  sheets  shall  be  made  out  as  often  as  once  in  every  six  months,  at 
which  times  each  partner  shall  be  entitled  to  be  credited  with  his  share  of 
the  earned  profits  of  the  business  as  an  increase  of  his  capital. 

IN  WITNESS  WHEREOF  the  said  parties  have  hereunto  set  their 
hands,  on  the  day  and  year  first  aforesaid.  JOHN  C.  BOLT, 

HENRY  W.  KNOX, 
JOHN  L.  COLMAN. 

Signed  in  the  presence  of 
WILLIAM  GREEN. 

Certificate   of  Partnership. 

[SEE  PAGE  64.] 

We  certify  that  we  constitute  a  partnership,  transacting  business 
as  importers  and  merchants  in  this  State.  Its  principal  place  of  business 
is  San  Francisco,  California.  Its  name  is  Bolt,  Knox  &  Co. 


PA  R  TNERSHIP.  1 J  1 


The  full  names  and  respective  places  of  residence  of  all  its  members 
are  signed  hereto. 

Dated  October  I,  1886. 

JOHN  CALEB  BOLT, 

Residing  at  San  Francisco,  Cal. 

HENRY  WALTER  KNOX, 

Residing  at  Oakland,  Cal. 

JOHN  LORD  COLMAN, 

Residing  at  Sacramento,  Cal. 

STATE  OF  CALIFORNIA,  \ 

CITY  AND  COUNTY  OF  SAN  FRANCISCO.   J" 

On  this  first  day  of  October,  in  the  year  one  thousand  eight  hundred 
and  eighty-six,  before  me,  A.  B. ,  a  notary  public  in  and  for  the  city  and 
county  of  San  Francisco,  State  of  California,  personally  appeared  John 
Caleb  Bolt,  Henry  Walter  Knox,  and  John  Lord  Colman,  known  to  me 
to  be  the  persons  whose  names  are  subscribed  to  the  within  instrument,  and 
acknowledged  to  me  that  they  executed  the  same. 

WITNESS  my  hand  and   official  seal,  on  the  day  and  year  aforesaid. 
[SEAL.]  WILLIAM  GREEN, 

Notary  Public. 

Agreement  for  Renewal  of  Partnership. 

[To  be  indorsed  on  the  original  articles.] 

The  within  agreement  of  copartnership  is  hereby  renewed  and  ex- 
Kuded  for  the  further  term  and  period  of  one  year  from  the  first  day  of 
Cctober,  eighteen  hundred  and  eighty-nine,  upon  the  same  terms  and  con- 
d  tions  as  in  said  original  agreement  expressed.  JOHN  C.  BOLT, 

HENRY  W.  KNOX, 
JOHN  L.  COLMAN. 
September  30,  1889. 

Signed  in  th~  presence  of 
WILLIAM  GREK  «. 

Agreement  for  Termination  of  Partnership. 

[To  be  indorsed  on  the  original  articles.] 

The  within  agreement  of  copartnership,  and  the  partnership  thereby 
created,  are  hereby  canceled,  terminated,  and  dissolved,  this  first  day  of 
January,  1887;  and  the  business  of  the  said  firm  shall  forthwith  be  liqui- 
dated, and  an  accounting  and  settlement  between  the  said  partners  shall 
be  had.  JOHN  C.  BOLT, 

HENRY  W.  KNOX, 
JOHN  L.  COLMAN. 

Signed  in  the  presence  of 
WILLIAM  GREEN. 

Notice  of  Dissolution  of  Partnership,  for  Publication* 

-5  DISSOLUTION  OF  COPARTNERSHIP. 

The  copartnership,  heretofore  existing  under  the  name  and  style  of 
Bolt,  Knox  &  Co.,  in  the  city  of  San  Francisco,  is  this  day  dissolved  by 


152  MISCELLANEOUS  INSTRUMENTS. 

mutual  consent.     All  persons  who  are  indebted    to  the  undersigned  are 
respectfully  requested  to  come  forward  and  make  immediate  payment. 
San  Francisco,  January  i,  1887.  JOHN  C.  BOLT, 

HENRY  W.  KNOX, 
JOHN  L.  COLMAN. 

MISCELLANEOUS  INSTRUMENTS. 

Under  this  head  will  be  found  a  variety  of  useful  forms.  For  the 
convenience  of  those  desiring  to  use  thsm,  reference  is  made  under  the 
various  headings  to  the  pages  in  the  preceding  work,  where  instruction  on 
the  subject  may  be  found. 

Chattel  Mortgage. 

[SEE  PAGES  115  AND  116.] 

This  mortgage,  made  the  first  day  of  October,  in  the  year  1886,  by  and 
between  John  Smith,  of  the  city  and  county  of  San  Francisco,  State  of 
California,  by  occupation  a  merchant,  mortgagor,  and  John  Jones,  of  the 
county  of  Alameda,  State  of  California,  by  occupation  a  capitalist,  mort- 
gagee, 

WITNESSETH,  that  the  mortgagor  mortgages  to  the  said  mortgagee  all 
that  certain  personal  property  situated  and  described  as  follows,  to  wit:  All 
those  steam  engines,  boilers,  machinery,  casks,  pipes,  tubes,  presses,  buck- 
ets and  other  utensils  now  upon  the  ranch  of  the  said  mortgagor  (being 
the  ranch  known  as  Smith's  Ranch,  and  situated  about  three  miles  south 
of  the  town  of  Fresno,  county  of  Fresno,  State  of  California),  and  being  the 
machinery,  engines,  pipes,  etc.,  used  upon  the  said  ranch  in  the  manu- 
facture of  wines,  brandies,  and  syrup,  as  security  for  the  payment  to  the 
said  morgagee  of  the  sum  of  five  thousand  dollars,  gold  coin  of  the 
United  States  with  interest,  according  to  the  terms  and  conditions  of  a 
certain  promissory  note,  made  by  the  said  mortgagor  to  the  said  mortgagee, 
bearing  even  date  herewith,  and  in  the  words  and  figures  following,  to 
wit:— - 
$5,000.  SAN  FRANCISCO,  October  i,  1886. 

One  year  after  date  I  promise  to  pay  to  the  order  of  John  Jones  the  sum  of  five 
thousand  dollars  gold  coin  of  the  United  States,  with  inte  es  ihereon,  in  like  gold 
coin  from  da:e  until  paid  at  th^  rate  of  9  per  cent  per  annum.  Value  received. 

JOHN  SMITH. 

It  is  agreed  that,  if  the  said  mortgagor  shall  fail  to  make  any  payment 
of  the  principal  or  interest  as  in  said  promissory  note  provided,  the  said 
morgagee,  his  heirs,  or  assigns,  may  take  possession  forthwith  of  all  said 
premises,  and  may  immediately  proceed  to  sell  the  same  in  the  manner  pro- 
vided by  law,  and  from  the  proceeds  thereof  retain  the  amount  which  is 
due  on  said  promissory  note,  with  interest,  together  with  a  reasonable  sum 
for  council  fees  together  with  the  costs  and  disbursements  of  such 
foreclosure  suit  as  shall  be  instituted  by  the  said  mortgagee  for  the  purpose 
of  foreclosing  this  mortgage,  paying  over  the  surplus  and  balance  of  such 
proceeds,  if  any  such  surplus  there  shall  be,  unto  the  said  mortgagee,  his 
heirs,  or  assigns. 

IN  WITNESS  WHEREOF  the  said  mortgagor  has  hereunto  set  his  hand 
on  the  day  and  year  first  aforesaid.  JOHN  SMITH. 

Signed  and  delivered  in  the 
presence  of 

WILLIAM  GREEN. 


BILLS  OF  SALE.  153 


Affidavit  to  be  Attached  to  the  Foregoing  Mortgage. 

r 

STATE  OF  CALIFORNIA,  \  gs 

City  and  county  of  San  Francisco,    J 

John  Smith,  the  mortgagor  in  the  foregoing  mortgage,  and  John  Jones, 
the  mortgagee  in  the  said  mortgage,  being  duly  sworn,  each  for  him- 
self, deposes  and  says  that  the  said  mortgage  is  made  in  good  faith,  and 
without  any  design  hinder,  delay  or  defraud  creditors.  JOHN  SMITH, 

JOHN  JONES. 

Subscribed  and  sworn  to  before  me  this  first  day  of  October,  one 
thousand  eight  hundred  and  eighty-six.  WILLIAM  GREEN, 

[SEAL.]  Notary  Public. 

Bill  of  Sale. 

[SEE  PAGE  74.] 

In  consideration  of  the  sum  of  two  hundred  and  fifty  dollars  ($250), 
to  me  paid  by  John  Smith,  of  the  city  and  county  of  San  Francisco,  State 
of  California,  I  hereby  sell,  transfer,  set  over,  and  deliver  to  said  Smith 
my  four  (4)  year  old  bay  horse,  "Tom,"  branded  "J.  J."  on  the  left  hip. 

Witness  my  hand  this  first  day  of  October,  1886.         JOHN  JONES. 
Signed  and  delivered  in  the 
prese-ce  of 

WILLIAM  GREEN. 

Bill  of  Sale. 

[ANOTHER  FORM.] 

For  and  in  consideration  of  the  sum  of  two  hundred  and  fifty  dollars 
($250),  to  me  paid  by  John  Smith,  of  the  city  and  county  of  San  Fran- 
cisco, State  of  California,  the  receipt  whereof  is  hereby  acknowledged,  I 
do  hereby  grant,  sell,  transfer,  and  assign  to  said  John  Smith,  his  execu- 
tors, administrators,  and  assigns,  all  the  following-described  personal  prop- 
erty, being  now  upon  my  ranch  near  Hay  wards,  Alameda  County,  Cali- 
fornia, to  wit:  50  Merino  sheep  (being  all  the  sheep  now  upon  said  ranch), 
3  Durham  cows,  I  Durham  bull,  I  Studebaker  farm  wagon,  I  pair  chest- 
nut draft  horses  (being  the  horses  known  as  "Tom"  and  "Jerry"  upon 
said  ranch);  I  set  double  harness  complete  (being  the  harness  now  in  use 
for  said  team). 

To  have  and  to  hold  the  same  unto  the  said  John  Smith,  his  execu- 
utors,' administrators,  and  assigns  forever. 

WITNESS  my  hand  this  first  day  of  October,  1886. 

JOHN  JONES. 

Signed  and  delivered  in  the 
presence  of 

WILLIAM  GREEN. 

Contract — General  Form. 

[SEE  PAGES  13-39.1 

THIS  CONTRACT,  entered  into  this  first  day  of  October,  one  thou- 
sand eight  hundred  and  eighty-six,  between  John  Jones  of  the  city  and 
county  of  San  Francisco,  State  of  California,  party  of  the  first  part,  and 
John  Smith  of  Oakland,  county  of  Alameda,  State  aforesaid,  party  oi 
the  second  part,  WITNESSETH: 


154  MISCELLANEOUS  INSTRUMENTS. 

'.'hat  the  said  party  of  the  first  part,  in  consideration  of  the  covenant* 
or  the  part  of  the  party  of  the  second  part  hereinafter  contained,  does 
covenant  and  agree  to  and  with  the  said  John  Smith  that 
iHere  insert  what  the  said  John  Jones  is  to  do.] 

And  the  said  party  of  the  second  part,  in  consideration  of  the  above 
covenants  on  the  part  of  the  party  of  the  first  part,  does  covenant  and 
agree  to  and  with  the  said  John  Jones  that 

[Here  insert  what  the  said  John  Smith  is  to  pay  or  do.] 

IN  WITNESS  WHEREOF,  we  have  hereunto  set  our  hands  the  day  and 
year  first  above  written.  JOHN  JONES, 

JOHN  SMITH. 

Signed  and  delivered  in  the 
presence  of 

WILLIAM  GREEN. 

Contract  for  Services. 

THIS  AGREEMENT,  made  and  entered  into  between  John 
Jones,  party  of  the  first  part,  and  John  Smith,  party  of  the  second  part, 
WlTNESSETH: — 

That  the  said  party  of  the  first  part  agrees  to  work  for  said  party  of 
the  second  part  on  his  farm  in  the  county  of  Alameda,  State  of  California 
[or,  as  clerk  or  salesman  in  his  store'],  faithfully  and  diligently  performing 
such  services  and  labor  on  or  about  said  farm  as  the  said  party  of  the 
second  part  may  direct,  for  the  period  of  one  year  from  the  date  hereof 
for  the  sum  of  thirty  dollars  ($30)  per  month. 

In  consideration  of  such  services  so  to  be  performed  the  said  party 
of  the  second  part  agrees  to  pay  the  said  party  of  the  first  part  the  sum 
of  thirty  dollars  ($30)  per  month,  payable  at  the  end  of  each  month,  for 
the  said  term  of  one  year,  as  above  agreed  upon,  and  also  to  provide  him 
with  suitable  board  and  lodging. 

IN  WITNESS  WHEREOF,  the  said  parties  have  hereunto  set  their 
hands  this  first  day  of  October,  in  the  year  1886.  JOHN  JONES, 

JOHN  SMITH. 

In  presence  of 

WILLIAM  GREEN. 

Agreement  of  Arbitration. 

WHEREAS,  differences  have  for  a  long  time  existed,  and  are  now 
existing  and  pending,  between  John  Smith  of,  etc.,  and  John  Jones  of, 
etc.,  in  relation  to  divers  subjects  of  controversy  and  dispute  [or  any  spe- 
cific question  or  claim,  describing  it},  now,  therefore,  we,  the  said  John 
Smiih  and  John  Jones,  do  hereby  mutually  covenant  and  agree  that  A.  B., 
C.  D.,  and  E.  F.,  of,  etc.,  or  any  two  of  them,  shall  arbitrate,  award, 
order,  judge,  and  determine,  of  and  concerning  all  manner  of  actions  and 
causes  of  actions,  suits,  controversies,  claims,  and  demands  whatsoever 
now  pending,  existing,  or  held  by  and  between  us,  the  said  parties;  and 
we  do  further  mutually  covenant  and  agree,  to  and  with  each  other,  that 
we  will  in  all  things  faithfully  observe  and  abide  by  the  decision  and 
award  which  said  arbitrators,  or  any  two  of  them,  shall  make  in  writing, 
on  or  before  the  first  day  of  May,  1887. 

Witness  our  hands  this  first  day  of  March,  1887.        JOHN  SMITH, 

JOHN  JONES. 

In  presence  of 
WILLIAM  G 


WILLS. 


Assignment  of  a  Debt. 

In  consideration  of  the  sum  of  ten  dollars  ($10.00)  to  me  paid  by 
John  Smith,  of  the  city  and  county  of  San  Francisco,  State  of  Califor- 
nia, I  hereby  sell,  assign,  transfer,  and  set  over  unto  the  said  John 
Smith  a  certain  debt  due  me  from  Thomas  Rose,  amounting  to  the  sum 
of  four  hundred  and  nineteen  dollars  ($419),  for  goods  ?old  and  deliv- 
ered by  me  to  said  Rose,  with  full  power  to  sue  for,  collect,  and  discharge, 
or  sell  and  assign  the  said  debt  and  claim. 

IN  WITNESS  WHEREOF,  I  have  hereunto  set  my  hand  this  first  day  of 
October,  1886.  JOHN  JONES. 

Signed  and  delivered  in  the 
presence  of 

WILLIAM  GREEN. 

Ordinary  Will. 

[SEE  PAGES  Zip  AND  130.] 

I,  John  Smith,  of  the  city  and  county  of  San  Francisco,  State  of  Cal- 
ifornia, being  of  sound  mind  and  memory,  do  hereby  make,  publish,  and 
declare  this  my  last  will  and  testament. 

I  give  and  bequeath  the  sum  of  $1,000,  gold  coin,  to  my  friend,  A.  B., 
of  Berkeley,  county  of  Alameda,  State  of  California. 

I  give  and  bequeath  all  the  rest  of  my  personal  property,  other  than 
money  in  hand  or  on  deposit,  to  my  brother,  James  Smith,  of  this  city  and 
county. 

I  give  and  bequeath  the  house  and  lot  on  Sutler  Street  in  this  city 
and  county,  upon  which  I  am  now  residing,  being  the  house  and  lot  on 
north  side  of  Sutler  Street,  137%  feet  west  of  X  Street,  and  running 
thence  west  60  feet  with  uniform  depth  northwardly  of  137^  ^eet>  to  m7 
wife,  Mary  Smith,  upon  condilion  that  she  accept  the  same  in  lieu  of  any 
other  claim  to  or  interest  in  any  of  the  property  of  which  I  may  die 
seized,  or  to  which  I  shall  be,  at  the  time  of  my  death,  entitled,  and  in  lieu 
of  all  claim  upon  her  part  as  survivor  of  our  community. 

All  the  rest  and  residue  of  my  estate,  real  and  personal,  I  give  and 
bequeath,  in  equal  shares,  to  my  children,  John,  Mary,  and  Alice.  I 
make  no  bequest  to  my  son  James,  or  to  my  grandchildren,  Thomas  and 
Mary  Carroll,  the  issue  of  my  deceased  daughter,  Kate,  for  the  reason  that 
I  have  already  made  sufficient  provision  for  them  by  my  gifts  to  them  dur- 
ing the  past  year. 

I  hereby  revoke  and  annul  all  wills  heretofore  made  by  me. 

I  name  and  appoint  my  wife,  Mary  Smith,  and  my  friend,  E.  L. 
Traill,  of  Oakland,  Alameda  County,  Cal.,  to  be  executors  of  this  will, 
and  desire  that  no  bonds  of  any  sort  be  required  of  them,  or  of  either  of 
them,  in  their  capacities  as  such  executor  and  executrix.  And  I  authorize 
and  empower  my  said  executor  and  executrix  to  sell  any  or  all  of  the  real 
estate  of  which  I  shall  die  seized  (excepting  the  Sutler  Street  lot  herein- 
above  described)  upon  such  terms,  and  at  such  times  as  they  shall  think 
fit,  and  without  obtaining  therefor  the  order  of  any  court. 

IN  WITNESS  WHEREOF,  I  have  hereunto  set  my  hand  this  first  day 
of  October,  1886.  JOHN  SMITH. 

The  above  ins/rument,  consisting  of  two  pages  besides  this  one,  was, 


lf)U  MISCELLANEOUS  INSTRUMENTS. 

on  the  said  first  day  of  October,  1886,  in  our  presence,  subscribed  by 
the  said  testator,  John  Smith,  who  thereupon  declared  to  us  that  the  said 
instrument  is  his  will,  and  we  thereupon,  at  his  request  and  in  his  presence 
and  in  the  presence  of  each  other,  subscribed  our  names  hereto  as  wit- 
nesses. JOHN  JONES, 

Residing  at  San  Francisco,  CaL 

THOMAS  JONES, 

Residing  at  San  Francisco,  CaL 

Holographic  Will. 

[SEE  PAGB  120.] 

SAN  FRANCISCO,  Cal.,  Jan.  4,  1887. 

I,  John  Smith,  hereby  make  my  last  will.  I  give  all  the  property 
of  which  I  die- possessed  to  my  wife,  Mary  Jane  Smith.  I  appoint  my 
wife  executrix  of  this  will,  without  bonds,  and  give  her  power  to  sell  any 
or  all  of  my  estate,  without  an  order  of  Court.  I  hereby  revoke  all  the 
wills  heretofore  by  me  made.  I  declare  that  this  will  is  entirely  written, 
dated,  and  signed  by  my  hand.  JOHN  SMITH. 

Nuncupative  Will. 

[SEE  PAGE  i2i.] 

In  the  matter  of  the  Nuncupative  Will  of  John  Smith,  deceased. 

On  the  third  day  of  January,  1887,  John  Smith,  being  at  that  tims 
in  expectation  of  immediate  death  from  an  injury  received  on  the  said 
day,  in  the  presence  of  the  subscribers,  did  declare  his  last  will  and  wishes 
concerning  the  disposition  of  his  property,  in  the  following  words,  viz. : 

"I  desire  that  one  thousand  dollars,  now  in  the  Hibernia  Savings 
Bank  at  San  Francisco,  California,  be  given  to  my  sister,  Clara  Smith, 
which  I  will  and  devise  to  her." 

At  the  time  the  said  John  Smith  stated  the  foregoing  as  his  will,  h» 
was  of  sound  mind  and  memory,  and  not  under  any  restraint;  and  he  at 
that  time  desired  us  to  bear  witness  that  such  was  his  wish,  desire,  and 
will. 

Reduced  to  writing  by  us,  this  tenth  day  of  January,  1887. 

JOHN  JONES, 
WILLIAM  GREEN. 


INDEX. 


ACCEPTANCE  OF  DRAFT 83 

ACCEPTANCE  OF  OFFKK   14 

ACCEPTANCE  (Statute  of  Frauds} 18 

ACCEPTANCE  FOR  HONOR 84 

ACCEPTOR 83 

ACCOMMODATION  PAPER 88 

ACKNOWLEDGMENT  OF  DEED  105 

AGENCY,  defined 52 

how  created 52 

how  ended 56 

AGENT,  defined 52 

duties  of 54 

notice  to 53 

payment  to 53 

powers  .of 53 

representations  of 53 

rights  of 55 

who  may  be « 53 

AGREEMENT 13 

AGREEMENT  TO  SELL 77 

ARTICLES  OF  CO-PARTNERSHIP 59 

ARTICLES  OF  INCORPORATION 69 

ASSIGNMENT  OF  LEASES 109 

ASSIGNMENT  OF  MORTGAGES 107 

ATTORNEYS,  lien  of 115 

AUCTION  SALES 78 

BAGGAGE , 99,   101 

BAILEE,  defined 94 

duties  of. - 95 

lien  of 114 

rights  of 95 

BAILMENTS,  classes  of 94 

defined   04 

<***> 


158  INDEX. 


PAGE. 

BAI  ^OR,  defined 94 

rights  and  duties ....     96 

BARTER 74 

BENEFICIARY,  defined 42 

rights  of 47 

BEQUEST 122 

BILLS  OF  EXCHANGE 81 

CARRIERS  OF  GOODS 100 

CARRIERS  OF  PASSENGERS 101 

CERTIFYING  CHECKS 90 

CHATTEL  MQRTGAGE 115 

C  HECKS 90 

CODE 8 

CODICH 121 

COMMISSION  MERCHANT,  lien  of 114 

COMMON  CARRIERS,  defined 99 

liability  of .. loo 

COMMON  LAW 7,      8 

COMMON  LAW  LIENS 113 

COMMON,  ownership  in , .     10 

COMMUNITY  PROPERTY 10 

COMPANY  (See  Corporation). 

COMPENSATED  BAILMENTS 94,     97 

CONDITIONAL  CONTRACTS 19,    20 

CONDITIONAL  SALES 77 

CONSIDERATION 14 

CONSTITUTION 8 

CONSTRUCTION 23 

CONSTRUCTIVE  FRAUD 17 

CONTRACTS  AGAINST  PUBLIC  POLICY... 16 

classes  of 19 

defined 13 

elements  of 13 

CO-PARTNERSHIP 59 

CORPORATIONS,  defined , 68 

bequest  to 122 

how  created 69 

officers  of 70 

powers  of „ 69 

COVENANTS,  in  deeds 105 

in  leases 108 


INDEX.  159 


CREDITORS,  fraud  against 17 

CUSTOM,  effect  of :   24 

DAYS  OF  GRACE :     85 

DEEDS,  delivery  of 105 

requsites  of. ...    \ 104 

DELIVERY  OF  GOODS 75 

statute  of  frauds 18 

DEVISES 122 

DIRECTORS  OF  CORPORATIONS 70 

DUTIES  OF  AGENTS... 54 

of  bailees 95 

of  partners 61 

of  pledgee 98 

of  pledger 98 

of  trustees 45,  48 

ENFORCEMENT  OF  LIENS 116 

EQUITABLE  LIENS 113,  1 14 

ESCROW 106 

EXECUTED  CONTRACTS 19 

EXECUTORY  CONTRACTS 19 

EXPRESS  AGENCY  52 

EXPRESS  CONTRACTS 19 

EXPRESS  TRUSTS 42 

EXPRESS  WARRANTY 76 

FIRM 59 

FIXTURES no 

FORECLOSURE,  chattel  mortgage 115 

mortgage 106 

pledge 97 

FORGED  PAPER 89 

FORMS  OF  LAW 7 

FRAUD 16 

GENERAL  PARTNERS 59 

GIFT 14 

GOOD  CONSIDERATION 15 

GRANTOR'S  LIEN 115 

GRATUITOUS  BAILMENTS 94 

HIRING 98 

HOLOGRAPHIC  WILL 120 

HOTEL  KEEPERS,  liability  of 99 

lien  of 113 


160  INDEX. 


PACK. 

IDIOT  32,     38 

IGNORANCE  OF  LAW 7,     30 

ILLEGAL  CONTRACTS 16 

IMMORAL  CONTRACTS 16 

IMPLIED  AGENCY 52 

IMPLIED  CONTRACTS 19 

IMPLIED  TRUSTS 43 

IMPLIED  WARRANTY 76 

IMPOLI  nc  CONTRACTS 16 

IMPOSSIBLE  CONSIDERATION 15 

IMPOSSIBLE  CONTRACTS 29 

IMPROVEMENTS no 

INCOMPLETE  SALE 77 

INDORSEMENT 82 

IMFANT 36 

INSANE 38 

INSANE  (STATUTE  OF  LIMITATIONS) 32 

INTEREST 87 

INTERPRETATION  OF  CONTRACTS  23 

JOINT  OWNERSHIP 10 

JOINT  PARTIES 39 

LANDLORD,  rights  of 109 

LANDLORD  AND  TENANT 107 

LAW,  defined 7 

LAWYERS,  lien  of 114 

LEASE 107 

LEGACY 122 

LEGAL  RATE  OF  INTEREST 87 

LETTER,  Contract  by 14 

LIABILITY  OF  COMMON  CARRIER 100 

LIABILITY  OF  HOTEL  KEEPER 99 

parents 37 

>  stockholders , 71 

LIEN 113 

LIMITATION  OF  TIME  TO  SUE 31 

LIMITED  PARTNERSHIP  (See  Special  Partnership}. 

LOAN 96 

LOST  PAPER 89 

LUNATIC : 38 

MAIL,  Contract  by 14 

MAKER  OF  NOTE 81 


INDEX.  161 


MARRIED  WOMEN 3^ 

deed  of 10$ 

MEETINGS  OF  CORPORATIONS 70 

MEMBERS  OF  CORPORATIONS 69 

MINORS,  contracts  of 36 

STATUTE  OF  LIMITATIONS 32 

MISTAKE 30 

MORAL  DUTY 15 

MORTGAGE,  chattel 115 

of  real  property 106 

effect  of 106 

MUNICIPAL  LAW 7 

NECESSARIES 37 

NEGOTIABILITY 81 

NEGOTIABLE  INTSRUMENTS 81 

NOTICE,  of  dishonor 85 

of  meeting 7° 

to  agent 53 

NUNCUPATIVE  Will 120,  121 

OFFER  AND  ACCEPTANCE 13 

OFFER  OF  PERFORMANCE,  effect  of 29 

how  made 28 

place  of 29 

time  for 28 

what  excuses  (See  Performance}. 

OFFICERS  OF  CORPORATIONS 70 

OFFSET  (See  Set- Off). 

OPEN  BOOK  ACCOUNT 32 

ORAL  CONTRACT 19 

OWNERSHIP 9 

OWNERSHIP  IN  COMMON 10 

PARENTS,  Liability  of 37 

PARTNER,  death  of 63 

defined 50 

duties  of 6 1 

powers  of 60 

rights  of 6 1 

who  may  be 60 

PARTNERSHIP,  how  created 59 

how  dissolved 62 

property , ,..,,.,,  ......  IQ,  6? 


162  INDEX. 


PACK. 

PART  PERFORMANCE 27 

PAYMENT  FOR  HONOR 88 

of  notes 87 

to  agents 53 

PERFORMANCE 26,  27 

what  excuses  (See  Offer  of  Performance) 

PERSONAL  PROPERTY 9 

PLEDGE 97 

PLEDGEE,  defined 97 

duties  of 98 

lien  of 113 

rights  of 97 

PLEDGOR,  rights  and  duties 98 

POWERS  OF  AGENTS 53 

corporations 69 

partners 60 

special  partners 64 

PRESENTMENT  FOR  ACCEPTANCE 83 

for  payment 84 

what  excuses 85 

PRINCIPAL  AND  AGENT 52 

PROMISSORY  NOTES 81 

PROPERTY 9 

PROTEST 87 

RATIFICATION  (agency) 53 

of  minor 37 

REAL  PROPERTY 9 

RECORDING 107 

REDEMPTION  OF  LIEN i  it 

RELEASE 29 

REPAIR  OE  LEASED  PREMISES 108 

REPRESENTATIONS  OF  AGENTS 53 

REQUISITES  OF  A  WILL 121 

RESCISSION 3° 

RESTRICTIVE  INDORSEMENT 82 

REVOCATION  OF  WILLS 121 

RIGHTS  OF  AGENTS 55 

bailees 95 

landlords i°9 

partners * °' 


INDEK.  It* 


RIGHTS — ( Continued]. 

Pledgee 97 

pledger 68 

stockholders 71 

SALE,  fraudulent 16 

personal  property 74 

real  property 104 

requisites  of 74 

when  complete 77 

when  should  be  written 17 

SELLER,  Lien  of 113,  1 14 

SET-OFF 30 

SPECIAL  PARTNERS 63 

STATE 7 

STATUTE 8 

STATUTE  OF  FRAUDS 17 

STATUTE  CF  LIMITATIONS 31 

STATUTORY  LIE'NS 113 

STOCK  CORPORATIONS 69 

STOCKHOLDERS 70 

rights  of 71 

liability  of , 71 

STOLEN  PAPER 89 

STOLEN  PROPERTY,  sale  of 74 

STOPPAGE  IN  TRANSIT 1 14 

SUBJECT-MATTER  OF  A  CONTRACT 15 

SUB-LEASE 109 

SUBSEQUENT  WILL 121 

TENANT 107 

TENDER  (See  Offer  of  Performance]. 

TESTATOR 119 

TRANSFER  OF  NOTES 82 

TRUSTEE,  classes 42 

creation  of 43 

defined 42 

duties  of 45,  48 

extinction  of 47 

powers  of 44 

rights  of 45 

who  may  be 44 

TRUSTOR 42 


164  INDEX. 


.UNDUE  INFLUENCE,  contracts 30 

wills 119 

UNWRITTEN  CONTRACT ig 

UNWRITTEN  LAW 7,  8 

VALUABLE  CONSIDERATION 15 

VENDOR'S  LIEN 115 

vVARRANTY 76 

WHO  MAY  MAKE  A  WILL 119 

WIFE  (See  Married  Women). 

WILLS,  classes 120 

defined 119 

how  made 120 

requisites  of 120 

revocation 121 

who  may  make 119 

WITHOUT  RECOURSE 82 

WRITTEN  CONTRACTS 19 

WRITTEN  LAW 7,  8 


INDEX  OK  FORMS. 


FACE. 

AGREEMENT  FOR  RENEWAL  OF  PARTNERSHIP 151 

AGREEMENT  FOR  TERMINATION  OF  PARTNERSHIP 151 

ARBITRATION,  agreement  of. 154 

ASSIGNMENT  OF  A  DEBT 155 

ASSIGNMENT  OF  LEASE 144,  145 

ASSIGNMENT  OF  MORTGAGE 140,  141 

BILLS  OF  EXCHANGE 129,  130 

BILLS  OF  SALE 153 

BOND,  common  form  of 133 

for  a  deed  of  land 134 

of  an  employ^ 135 

of  indemnity  for  lost  note 134 

of  officer  of  a  corporation 134 

CERTIFICATE  OF  PARTNERSHIP 150 

CHATTEL  MORTGAGE 152 

CHECK 129 

COLLATERAL  NOTE 131 

CONTRACT,  general  form  of 153 

for  services 154 

DEED,bondfor 134 

of  gift 13? 

of  grant,  bargain,  and  sale 136 

of  quit-claim 136 

of  partition 138 

DRAFTS 129 

DUE-BILLS 127,  128 

GUARANTY  OF  RENT 144 

HOLOGRAPHIC  WILL 156 

INDORSEMENTS,  forms  of 131,  132 

INSTALLMENT  NOTE 130 

JOINT  AND  SEVERAL  NOTE 131 

LEASE  OF  FARM 142 

of  house 143 

assignment  of    1^4,  145 

notice  to  change  terms  of 145 

notice  to  terminate 145 


166  INDEX  OF  FORMS. 


MORTGACK,  chattel   52 

of  rcui  caiate 1 38 

assignment  of 140,  141 

partial  release  of 141 

satisfaction  of 141 

NEGOTIABLE  INSTRUMENTS 128 

NON-NEGOTIABLE  NOTE i2i 

NOTICE  OF  DISSOLUTION  OF  PARTNERSHIP 151 

NOTICE  OF  DISHONOR  TO  INDORSER  OF  NOTE 1 33 

NOTICE  OF  QUITTING  BY  TENANT 1 4.0 

NOTICE  OF  PROTEST  OF  BILL  OF  EXCHANGE 1 32 

NOTICE  TO  INCREASE  RENT 1 45 

NOTICE  TO  QUIT  BY  THE  LANDLORD 1 15 

NUNCUPATIVE  WILL 1 56 

PARTIAL  RELEASE  OF  MORTGAGE i  \\ 

•    PARTNERSHIP,  articles  of 1 19 

agreement  for  renewal  of. 151 

agreement  for  termination  of i  S I 

certificate  of, i  So 

notice  of  dissolution  of 151 

POWERS  OF  A  FTORNEY,  general i  j.6 

special i  \"] 

short  form  of I  \% 

to  vote  stock  at  election i  \& 

revocation  of i  j-9 

substitution  of  attorney I  }.8 

PROMISSORY  NOTES 130,  151 

PROTEST  OF  NOTE  OR  BILL  OF  EXCHANGE 132 

notice  of 132 

PROXY        148 

REAL  PROPERTY  CONTRACTS 136 

RECEIPTS 126,  127 

REVOCATION  OF  POWER  OF  ATTORNEY 149 

SATISFACTION  OF  MORTGAGE 141 

SU BSTITUTION  OF  ATTORNEY-IN-FACT 148 

WTLL,  ordinary 155 

holographic i$6 

nuncupative 156 


YC  4493° 

3r 


UNIVERSITY  OF  CALIFORNIA  LIBRARY 


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